Peer Pressure and Inequity Aversion in the Japanese Firm
نویسنده
چکیده
The herein study presents an explanation of the high frequency of team production and high level of peer monitoring found in Japanese firms, in terms of a simple and empirically grounded variation in individual utility functions. We argue that Japanese agents are generally characterized by a higher degree, with respect to their Western counterparts, of aversion to unfavourable inequality, a feature which explains seemingly puzzling experimental evidence. In combination with long term employment and various organizational practices, this creates the conditions for obtaining willingness to exert mutual monitoring and peer pressure which facilitates the convergence towards cooperative equilibrium in dilemma type situations. *Post-Doctoral Research Fellow, IESE JEL Classification: C7, C91, C92, D63, H41, L23
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