Teamwork as a Self-Disciplining Device


Fahn, Matthias (LMU Munich and CESifo)
Hakenes, Hendrik (University of Bonn and CEPR)


We show that team formation can serve as an implicit commitment device to overcome problems of self-control. If individuals have present-biased preferences, effort that is costly today but rewarded at some later point in time is too low from the perspective of an individual’s long-run self. If agents interact repeatedly and can monitor each other, a relational contract involving teamwork can help to improve performance. The mutual promise to work harder is credible because the team breaks up after an agent has not kept this promise – which leads to individual underproduction in the future and hence a reduction of future utility.


self-control problems; teamwork; relational contracts


L22; L23


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Teamwork as a Self-Disciplining Device
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