Working together

Description

Norms are informal rules that prescribe or prohibit behavior for members of a collectivity. It is puzzling as to why people conform to such rules when there seem to be no centralized and formal enforcement mechanism. This study examines how three Chinese environmental organizations motivate and regulate members' behavior through organizational norms. I propose a three-dimensional conceptual framework for understanding the motivational basis of norm compliance. Specifically, players are conceived as having not only materialistic self-interests, but also intrinsic value-beliefs toward collective goals and attachment-based altruistic concerns for other members. Game-theoretical models are developed to analyze how the three motivational factors affect norm compliance. The analysis shows that in one-shot public-good games, players' value-beliefs towards the public good help improve their effort levels but can not completely eliminate the externality in the system and prevent free-riding. Interpersonal attachments, in comparison, can absorb and even eliminate the externality. The group is able to achieve Pareto efficiency when such interpersonal bonds are sufficiently strong. In repeated games, even purely self-interested individuals can achieve Pareto-efficient outcomes through proper arrangements of monitoring and sanctioning. But interpersonal attachments can make robust contributions to norm compliance in this context as well. In the complete information case, I show that interpersonal bonds can help lower the required discount factor for sustaining efficient equilibrium outcomes. In situations where information is scarce and individuals' deviation is not statistically detectible, I show that interpersonal attachments can reduce the sanctioning cost and improve the system's efficiency. The research also reveals certain challenges and risks associated with running a high-attachment, norm-based system. As attachments strengthen, organizational outcomes gravitate towards the preference of the group majority and become increasingly uncontrollable from the top. That can lead to instability if there exist large preference discrepancies within the organization and if the powerful members happen to be in the minority positions.

Subjects