Should Transparency Be (In-)Transparent? On Monitoring Aversion and Cooperation in Teams

22 Pages Posted: 8 Feb 2022

See all articles by Michalis Drouvelis

Michalis Drouvelis

University of Birmingham - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Johannes Jarke-Neuert

University of Hamburg - Center for Earth System Research and Sustainability (CEN)

Johannes Lohse

University of Birmingham - Birmingham Business School

Date Written: December 23, 2021

Abstract

Many modern organisations employ methods which involve monitoring of employees' actions in order to encourage teamwork in the workplace. While monitoring promotes a transparent working environment, the effects of making monitoring itself transparent may be ambiguous and have received surprisingly little attention in the literature. Using a novel laboratory experiment, we create a working environment in which first movers can (or cannot) observe second mover's monitoring at the end of a round. Our framework consists of a standard repeated sequential Prisoner's Dilemma, where the second mover can observe the choices made by first movers either exogenously or endogenously. We show that mutual cooperation occurs significantly more frequently when monitoring is made transparent. Additionally, our results highlight the key role of conditional cooperators (who are more likely to monitor) in promoting teamwork. Overall, the observed cooperation enhancing effects are due to monitoring actions that carry information about first movers who use it to better screen the type of their co-player and thereby reduce the risk of being exploited.

Keywords: monitoring, teamwork, transparency, laboratory experiment

JEL Classification: C92, D07, H41

Suggested Citation

Drouvelis, Michalis and Jarke-Neuert, Johannes and Lohse, Johannes, Should Transparency Be (In-)Transparent? On Monitoring Aversion and Cooperation in Teams (December 23, 2021). Available at SSRN: https://ssrn.com/abstract=3992582 or http://dx.doi.org/10.2139/ssrn.3992582

Michalis Drouvelis

University of Birmingham - Department of Economics ( email )

Economics Department
Birmingham, B15 2TT
United Kingdom

HOME PAGE: http://sites.google.com/site/michalisdrouvelis/

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Johannes Jarke-Neuert (Contact Author)

University of Hamburg - Center for Earth System Research and Sustainability (CEN) ( email )

Bundesstrasse 53
Hamburg, Hamburg 20146
Germany

Johannes Lohse

University of Birmingham - Birmingham Business School ( email )

Edgbaston Park Road
Birmingham, B15 2TY
United Kingdom

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