Mental Fatigue in Partnerships: Can Free-Riding Be Beneficial?
11 Pages Posted: 24 Sep 2009
Date Written: September 23, 2009
Abstract
We develop a model of partnership production in which the partners are prone to mental exhaustion. As in standard static models, profit-sharing induces free riding. In our model, however, free-riding also reduces the steady-state level of fatigue. As a result, the steady-state levels of output and welfare may be higher in the non-cooperative equilibrium with free riding than in the cooperative equilibrium.
Keywords: partnerships, free-riding, mental fatigue
JEL Classification: J22, J24, D23
Suggested Citation: Suggested Citation
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