Black Sheep and Walls of Silence
35 Pages Posted: 6 Jul 2004
Date Written: June 2004
In this paper we analyze the frequently observed phenomenon that (i) some members of a team (black sheep) exhibit behavior disliked by other (honest) team members, who (ii) nevertheless refrain from reporting such misbehavior to the authorities (they set up a wall of silence). Much cited examples include hospitals and police departments. In this paper, these features arise in equilibrium. An important ingredient of our model are benefits that agents receive when cooperating with each other in a team. Our results suggest that asymmetric teams where these benefits vary across team members are especially prone to the above mentioned phenomenon.
Keywords: teams, misbehavior, wall of silence, asymmetric information
JEL Classification: D82, C73
Suggested Citation: Suggested Citation