Peer Pressure and Partnerships

Eugene Kandel, Edward P. Lazear

Research output: Contribution to journalArticlepeer-review

898 Scopus citations


Partnerships and profit sharing are often claimed to motivate workers by giving them a share of the pie. But in organizations of any significant size, the free-rider effects would seem to choke off any motivational forces. This analysis explores how peer pressure oper-ates and how factors such as profit sharing, shame, guilt, norms, mutual monitoring, and empathy interact to create incentives in the firm. The argument that Japanese firms enjoy team spirit because compensation is linked to overall profitability is analyzed. An expla-nation for the prevalence of partnerships among individuals in simi-lar occupations is provided.

Original languageAmerican English
Pages (from-to)801-817
Number of pages17
JournalJournal of Political Economy
Issue number4
StatePublished - 1 Aug 1992
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 1992 by The University of Chicago. All rights reserved.


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