The Contributions of Behavioural Economics to Understanding and Advancing the Sustainability of Worker Cooperatives

Abstract

We characterize how just-selfish workers are incompatible with long-run success in workers’ cooperatives. Emphasizing mutual monitoring as key to cooperatives’ organization design to combat “shirking” we discuss what possible mixes of behavioral types in the membership of a cooperative are compatible with sustainable success. Sustainability depends on social preferences and cooperative norms that are compatible with low levels of shirking and high levels of mutual monitoring. When worker types are partly unobservable, cooperatives must be more attractive to the types of workers they value most as members. We describe measures that enhance cooperative forms and measures that mitigate adverse selection.

Keywords: cooperative enterprises

JEL Classification: D02, D03, J54, M5