Influence of Social Capital on the Incentive Reversal: Behavioral Economics Approach Based on Game Theory

The limitation of the production factors is always considered as one of the important issues in the production process. One of these factors is the workforce, which will provide different levels of work for wage change; so, according to Classic economics, increasing monetary rewards will lead to an increase in labor force effort. Recently, incentive reversal is introduced with the advent of group activities in organizations; this means that increasing the monetary rewards of individuals will reduce the efforts of some people. In addition, the ability of individuals to take collective action to identify and solve problems can be viewed from the point of view of social capital. In this regard, the main question of this study is to investigate the influence of social capital on cooperation within the group and an adjustment free rider effect in the framework of sequential game. Therefore, by providing a laboratory environment and the usage of 210 players, a three-member and two-stage team game was designed. Results show that there is a significant relationship between the level of social capital and the individual incentive reversal. In addition, increasing social capital reduces the level of incentive reversal in the third players.