PEER TRANSPARENCY IN TEAMS: DOES IT HELP OR HINDER INCENTIVES?*

In a joint project involving two players of a two‐round effort investment game with complementary efforts, transparency, by allowing players to observe each other’s efforts, achieves at least as much, and sometimes more, collective and individual efforts relative to a nontransparent environment. Without transparency multiple equilibria can arise, and transparency eliminates the inferior equilibria. When full cooperation arises only under transparency, it occurs gradually: No worker sinks in the maximum amount of effort in the first round, preferring instead to smooth out contributions over time. If the players’ efforts are substitutes, transparency makes no difference to equilibrium efforts.     

Why executives won't talk with their people

Three years ago Robert Saltonstall, Jr., Associate Vice President for Operations at Harvard University, faced an increasingly common problem in business and institutions today when he severed 68 long-service, wage employees to solve a problem of low productivity in a particular trade group. He did this using relatively conventional and creative techniques. But now three years later, he asked Nona Lyons of the Harvard Graduate School of Education, who is researching the ethical dimensions of executives' decisions, to assist him in evaluating how these employees felt about the process. The employees' loyalty in spite of everything has caused Saltonstall to rethink the ethics of both his decision and its execution. In this article Saltonstall asks and answers many of the questions executives face when challenged to handle work reduction decisions in a more ethical way. And Lyons assists him with commentary on some of the current research on moral decision-making which will help executives to understand why they find some of their decisions to be moral dilemmas. The article challenges executives to think about reorganization decisions in a participative way and suggests seven central issues executives should consider before commencing a participative approach. The article reaches no specific conclusion, but introduces some new ways to think about lay-off decisions and their ethical implications for those affected.Nona Lyons is a Lecturer at the Harvard Graduate School of Education. Her research interests link moral and developmental psychology with education. A former school administrator, Lyons returned to graduate study in a mid-career professional change. Her doctoral research involved developing a methodology that made possible the first systematic identification of two moral considerations in peoples' thinking about their real-life moral conflicts, that is, traditional considerations of justice and more recently revealed considerations of care. In 1987, Lyons was awarded a Spencer Fellowship to explore and document how teachers come to change their practices as well as the values dimensions of their work. In all, Lyons has been concerned to connect research with new ways to think about the education of professionals.Robert Saltonstall, Jr. is currently Associate Dean for Harvard Medical School Operations. From June, 1981 to November, 1987 he was Associate Vice President of Operations for Harvard University. In that capacity he handled the subject matter for this article. Prior to his university work Saltonstall served in the commercial sector as General Manager of a resort, and President of a boat manufacturing company. He also held various manufacturing positions in the packaged food industry. He holds an MBA from Harvard (1964) and an A.B. in math from Brown (1957).