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Moral hazard and monitoring.
wMarginal products of team
members not separately measurable.
nMembers paid on the basis
of the whole team’s output.
wIncentive to shirk.
nEach member receives all the benefits
of shirking (leisure) but can spread the costs of shirking to other members.
wInefficiency.
nSince everyone has the same incentives, all shirk, and the team ends up in a low-output equilibrium no one wants.
Team production.