Teamwork As a Self-discipling Device
Abstract: This paper shows that team formation can serve as an implicit commitment device to overcome problems of procrastination and self-control. In a situation where individuals have present-biased preferences, any effort that is costly today but rewarded at some later point in time is too low from the perspective of earlier periods. If agents interact repeatedly and can monitor each other, a relational contract involving teamwork can help to improve an agent's performance. The mutual promise to work harder is credible because an agent's punishment following a deviation -- a reversion to individual (under-) production in the future -- is rather unattractive from today's perspective. This holds even though the standard free-rider problem is present and teamwork renders no technological benefits. Moreover, we show that even if teamwork renders technological benefits, the performance of a team of agents with self-control problems can actually be better than the performance of a team of “normal” (fully time-consistent) agents.
