UBS Center Newsletter | N°12, January 2019

11 PUBLICATIONS New UBS Center Public Paper, putting cooperation and feedback center stage. UBS CENTER PUBLIC PAPER SERIES The Public Paper series are a compilation of research insights on a specific topic. They offer both a tour d’horizon from an economics per- spective and a simplified, compact deep-dive of a demanding topic. All Public Paper editions are available for down- load on our webpage: www.ubscenter.uzh.ch/en/publications.html ABOUT THE AUTHOR Ernst Fehr has been Professor of Microeconom- ics and Experimental Economics at the Univer- sity of Zurich since 1994. He currently serves as director of the UBS International Center of Eco- nomics in Society. His research focuses on the proximate patterns and the evolutionary origins of human altruism and the interplay between social preferences, social norms and strate- gic interactions. He has conducted extensive research on the impact of social preferences on competition, cooperation and on the psychologi- cal foundations of incentives. tries, which uphold values that lead to a high level of cooperation and trustworthiness – and thus trust – flourish significantly better. This is the case in most northern European countries, such as Nor- way, Sweden, and Finland – in sharp contrast to countries like Liberia or Rwanda. How to make it work While every company has some sort of corporate culture, there is a big variance in their design. Unsurprisingly, they also face different corporate culture problems – like free-riding or the lack of cooperation among coworkers. Some problems are easily solved with simple nudges and awareness campaigns, such as providing feedback opportuni- ties to identify free riders. However, others require implementing a new set of strong social norms with associated enforcement rules. Fehr introduces a matrix to assess and address corporate culture problems. He classifies problems along two dimen- sions: the employees’ average willingness to comply voluntarily with the cooperative social norms, and the employees’ awareness of the negative effects that result from non-compliance. Depending on the category in which a problem falls, Fehr proposes different measures, such as changing norm-driven and financial incentives or raising awareness for the needs of other business units within a firm. A final important takeout from Fehr’s paper is that the mere proclamation of abstract values – such as integrity, loyalty, or commitment – does not suffice for achieving a cooperative culture. Values need to be translated into concrete behaviors, they need to be widely shared, lived, integrated into everyday actions, and enforced by both top management and the employees. Moreover, to make it work, the behavioral rules must be clear and simple.