The purpose of this paper is to examine whether managers punish more and work harder in teams with peer monitoring when it is less costly to punish in a two-period, one-shot horizon.
An experiment is conducted in a two-period horizon with two treatments. The structure of performance measures makes it costless or costly to punish in the second period.
The results find punishing, contingent on first-period strategies, was significantly greater when it was costless compared to costly, as expected. Working, which is analogous to cooperating in prisoner dilemma games, was also significantly greater in the first and second periods when punishing was costless.
This paper is informative about the potential benefits of performance measures in dynamic team environments, which can be challenging and costly to develop. It adds insight into the design of self-discipline and tasks in teams which might help increase productivity.
This paper is related to the research on indefinite horizons, which attributes increases in cooperation to the existence of subgame perfect strategies to cooperate and potential gains from future cooperation. In comparison, this study examines the effects of the existence of subgame perfect strategies to work in isolation from the potential gains from future interactions. In addition, it examines whether their potential benefits depend on the cost of punishing when punishing is subgame perfect in a one-shot horizon.
Authors would like to thank the members of Anthony Nikias’ committee: Richard Young (chair), Anil Arya, John Kagel, Eric Spires and David Wallin. We would also like to thank Jake Birnberg, John Butler, Richard Dietrich, John Fellingham, Jinhan Pae, Andrew Schotter and Siew Hong Teow for helpful comments and suggestions. We also would like to thank workshop participants at Nanyang Technological University; SUNY, Brockport; SUNY, Geneseo; the University of Northern Iowa; the University of Texas, Brownsville; the 2019 Conference on Critical Accounting; the 2018 GLOSEARCH Conference; and the 2001 AAA MAS Doctoral Colloquium for helpful comments and suggestions. Financial assistance from the Farmingdale State College Faculty Research Award for research study support and conference travel, and the Ohio State University Department of Accounting and MIS for research study support is gratefully acknowledged.
Nikias, A. and Sy, A. (2021), "Mutual monitoring in multi-period teams: an experimental investigation", Team Performance Management, Vol. 27 No. 3/4, pp. 192-209. https://doi.org/10.1108/TPM-03-2020-0021
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