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International Review of Economics

, Volume 59, Issue 1, pp 3–20 | Cite as

Human resource management and productivity in the “trust game corporation”

  • Leonardo Becchetti
  • Giuseppina Gianfreda
  • Noemi Pace
Article

Abstract

Contemporary production activity is crucially determined by the performance of complex tasks with the characteristics of corporate trust games. In this paper, we outline a productivity paradox showing that, under reasonable conditions, the noncooperative solution, which yields a suboptimal firm output, is the equilibrium of corporate trust games when relational preferences are not sufficiently high. We show that tournaments and steeper pay for performance schemes may crowd out cooperation in the presence of players preferences for relational goods. These findings help to explain firm investment in workers’ relationships and the puzzle on the less than expected use of such schemes.

Keywords

Trust game Work incentives Folk theorem 

JEL Classification

C79 L29 Z13 

Notes

Acknowledgments

The authors thank Luciano Andreozzi, Masahiko Aoki, Avner Ben Ner, Bruce Chapman, Allen Kaufman, Bruno Frey, Lorenzo Sacconi, Jolene Skordis, Alessandro Vercelli, OliverWilliamson for their comments. A special thank to Annalisa Luporini for her precious suggestions. The usual disclaimer applies.

Supplementary material

12232_2011_143_MOESM1_ESM.doc (352 kb)
DOC (352 KB)

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Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  • Leonardo Becchetti
    • 1
  • Giuseppina Gianfreda
    • 2
  • Noemi Pace
    • 3
  1. 1.Department of Economics and InstitutionsUniversity of Rome Tor VergataRomaItaly
  2. 2.University of TusciaViterboItaly
  3. 3.University Ca’ Foscari of VeniceVeniceItaly

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