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The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 425:
Reputation in Team Production

Amihai Glazer and Björn Segendorff

Abstract: Consider team production with two people. Each is characterized by a prior distribution that he will do Right or Wrong. After the outcome of the project is observed, these probabilities are updated. When output depends on the weakest link in production, following project failure the posterior probability that a person did Right declines with the probability that the other worker did Right. The same holds when output depends on the best shot in production and the team effort succeeded. A leader concerned about his reputation may therefore prefer to work with a person unlikely to do Right.

Keywords: Reputation; team; competence; (follow links to similar papers)

JEL-Codes: C72; D72; D82; J33; (follow links to similar papers)

16 pages, January 21, 2001, Revised March 1, 2001

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