103 Pages Posted: 4 May 2009 Last revised: 2 Dec 2009
Date Written: November 30, 2009
This paper examines moral hazard in teams over time. Agents are collectively engaged in an uncertain project, and their individual efforts are unobserved. Free-riding leads not only to a reduction in effort, but also to procrastination. The collaboration dwindles over time, but never ceases as long as the project has not succeeded. In fact, the delay until the project succeeds, if it ever does, increases with the number of agents. We show why deadlines, but not necessarily better monitoring, help to mitigate moral hazard.
Keywords: Moral hazard, Teams, Experimentation, Collaboration, Public goods, Learning
JEL Classification: C72, C73, D83
Suggested Citation: Suggested Citation