Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/33358 
Year of Publication: 
2006
Series/Report no.: 
IZA Discussion Papers No. 2020
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Due to incomplete contracts, efficiency of an organization depends on willingness of individuals to take non-selfish actions, e.g., cooperate when there is no incentive to do so, or punish inefficient actions by others. Organizations also constitute a social boundary, or group. We investigate whether this social aspect of organizations has an important benefit, fostering unselfish cooperation and norm enforcement within the group, but whether there is also a dark side, in the form of hostility between groups. Our experiment provides the first evidence without the confounding effect of self-selection into groups. Individuals are randomly assigned to different platoons during a four-week portion of officer training in the Swiss Army. We conduct choice experiments - simultaneous prisoner's dilemma games, with and without third-party punishment - in week three. Random assignment significantly increases willingness to cooperate with fellow platoon members. Assignment does not lead to hostility, in the sense of vindictive punishment of outsiders, but does affect norm enforcement, enhancing willingness to enforce a norm of cooperation towards fellow platoon members. This suggests that the social aspect of organizations motivates efficient behavior even when ordinary incentives fail, and helps explain practices designed to foster social ties or group identification within an organization.
Subjects: 
organizations
in-group favouritism
social identity
punishment
JEL: 
D01
D23
J00
Document Type: 
Working Paper

Files in This Item:
File
Size
399.48 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.