Coordination and Motivation in Flat Hierarchies: The Impact of the Adjudication Culture

This paper considers a variation of the partnership game with imperfect public information, in which teams are semi-autonomous. The only hierarchical intervention in teamwork is when a superior is called in by a team member to adjudicate alleged cases of free-riding or unjustified lateral punishment (flat hierarchy) according to publicly known adjudicative rules (adjudication culture), using for statistical inference a publicly known organizational norm for teamwork cooperation. It is shown that it is advantageous to set a non-elitist organizational teamwork norm. Furthermore, fairness in adjudication is valuable for economic reasons alone. Copyright (c) The London School of Economics and Political Science 2005.