Premium
The Fear of Exclusion: Individual Effort when Group Formation is Endogenous *
Author(s) -
Arne Brekke Kjell,
Nyborg Karine,
Rege Mari
Publication year - 2007
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/j.1467-9442.2007.00506.x
Subject(s) - stylized fact , group (periodic table) , incentive , economics , public good , microeconomics , teamwork , principal (computer security) , task (project management) , social psychology , social group , group behavior , psychology , chemistry , management , organic chemistry , computer science , macroeconomics , operating system
To secure their membership in a popular group, individuals may contribute more to the group's local public good than they would if group formation were exogenous. Those in the most unpopular group do not have this incentive to contribute. This may result in substantial differences in individual effort level between groups. Our model thus provides one explanation for the existence of group‐specific behavioral norms. A principal will prefer exogenous or endogenous group formation depending on whether he prefers high or low levels of the local public good. We analyze two stylized examples: social interaction in schools, and multiple‐task teamwork.