This paper seeks to understand what motivates workers to be altruistic toward one another and studies whether firms benefit from encouraging these "human relations" in the workplace. The paper first proposes that feelings of altruism can be individually rational in certain settings in which the variables controlled by the workers are strategically linked. The paper then studies what this implies for equilibrium altruism in two situations. The first has workers who are paid as a function of joint output. The second is the relationship between subordinates and their supervisors.

This paper seeks to understand what motivates workers to be altruistic toward one another and studies whether firms benefit from encouraging these "human relations" in the workplace. The paper first proposes that feelings of altruism can be individually rational in certain settings in which the variables controlled by the workers are strategically linked. The paper then studies what this implies for equilibrium altruism in two situations. The first has workers who are paid as a function of joint output. The second is the relationship between subordinates and their supervisors.

Firms often concentrate on a narrow range of activities and claim to forgo other, apparently profitable, opportunities. This pursuit of narrow strategies is applauded by some academics who study strategic management. We present two related theoretical models in which firms do indeed benefit from pursuing such narrow strategies. In these models, a narrow strategy is beneficial because it enables the firm to motivate its employees to search for ways of increasing the profitability of its core activities. These benefits arise in our model because an incompleteness of contracts precludes offering similar incentives when the firm is involved in many activities.