Cognition and Incentives in Cooepratives
25 Pages Posted: 1 Jun 2022
Date Written: May 30, 2022
We extend the results of Feng and Hendrikse (2012) by investigating the relationship between cognition and incentives in cooperatives versus investor-owned firms (IOFs) in a multi-tasking principal-agent model. The principal chooses the incentive intensity as well as the precision of monitoring, while the agent chooses the activities. We establish that a cooperative is uniquely efficient when either the synergy between the upstream and downstream activities or the knowledgeability of the members regarding the cooperative enterprise is sufficiently high.
Keywords: cognition, incentives, cooperative, governance, multi-tasking
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