CFDP 1695



Publication Date: April 2009

Revision Date: November 2009

Pages: 102


This paper examines moral hazard in teams over time. Agents are collectively engaged in an uncertain project, and their individual efforts are unobserved. Free-riding leads not only to a reduction in effort, but also to procrastination. The collaboration dwindles over time, but never ceases as long as the project has not succeeded. In fact, the delay until the project succeeds, if it ever does, increases with the number of agents. We show why deadlines, but not necessarily better monitoring, help to mitigate moral hazard.


Moral hazard, Teams, Experimentation, Collaboration, Public goods, Learning

JEL Classification Codes: C72, C73, D83


Published in American Economic Review (April 2011), 101: 632-663 [DOI]