Interactions across multiple games: cooperation, corruption, and organizational design

Abstract

Teams face a variety of strategic circumstances, and it is socially beneficial for teams to cooperate in productive but not in corrupt ones. Understanding the behavior and social impact of teams requires understanding how cooperation in one situation depends on expectations of cooperation in others. We examine how the assignment of people to teams, and teams to tasks, affects cooperation among team members. We characterize the interdependency of cooperation across situations and show that in some settings it may be impossible to get desirable types of cooperation without also getting undesirable cooperation. We show how cooperation in such interdependent settings is affected in nuanced ways by changes in the payoffs to cooperation and the temptations to deviate. This has novel implications for performance bonuses, occupational safety, and whistle-blowing rewards. The optimal organizational design involves minimizing corruption by some reshuffling of team members and specializing of the tasks to which different teams are assigned. We analyze how technological advances change optimal team structure. Throughout, we discuss the implications for organizing bureaucracies, such as police forces and militaries, as well as private enterprises.

Keywords: Teams, Organizational Design, Corruption, Cooperation, Police, Bureaucracy, Muli-Games

JEL Classification: C73, D23, D73, L20