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The purpose of this paper is to examine whether managers punish more and work harder in teams with peer monitoring when it is less costly to punish in a two-period, one-shot horizon.

An experiment is conducted in a two-period horizon with two treatments. The structure of performance measures makes it costless or costly to punish in the second period.

The results find punishing, contingent on first-period strategies, was significantly greater when it was costless compared to costly, as expected. Working, which is analogous to cooperating in prisoner dilemma games, was also significantly greater in the first and second periods when punishing was costless.

This paper is informative about the potential benefits of performance measures in dynamic team environments, which can be challenging and costly to develop. It adds insight into the design of self-discipline and tasks in teams which might help increase productivity.

This paper is related to the research on indefinite horizons, which attributes increases in cooperation to the existence of subgame perfect strategies to cooperate and potential gains from future cooperation. In comparison, this study examines the effects of the existence of subgame perfect strategies to work in isolation from the potential gains from future interactions. In addition, it examines whether their potential benefits depend on the cost of punishing when punishing is subgame perfect in a one-shot horizon.

This paper aims to describe two scenarios where the problem of information search interacts with the firm’s investment decisions. Investment decisions cannot be made separately from the need to acquire information.

The scenarios are illustrated with easy-to-follow numerical examples. Vignettes put the numerical examples in their real-world context.

In both scenarios, the firm should choose what might myopically appear as the lower net per value (NPV) alternative to efficiently deal with the information search problem.

Long-term investments are an important topic in the study of both accounting and finance, but it is in the study of accounting where information issues related to long term investments come to the fore. The traditional textbook approach on whether to accept long-term investment opportunities is to use the NPV rule. However, as illustrated in this note, in many important situations where information search is crucial to investment choice, the NPV rule will not lead to efficient investment decisions.