Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 0425: Reputation in Team Production

Amihai Glazer and Björn Segendorff
Additional contact information
Amihai Glazer: Department of Economics, University of California, Irvine
Björn Segendorff: Dept. of Economics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden

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

JEL-codes: C72; D72; D82; J33

16 pages, First version: January 21, 2001. Revised: March 1, 2001.

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