Decision–Making and Implementation in Teams
AbstractWe use a mechanism-design approach to study a team whose members choose a joint project and exert individual efforts to execute it. Members have private information about the qualities of alternative projects. Information sharing is obstructed by a trade-off between adaptation and motivation. We determine the conditions under which first-best project and effort choices are implementable and show that these conditions can become relaxed as the team grows in size. This contrasts with the common argument (based on free-riding) that efficiency is harder to achieve in larger teams. We also characterize the second-best mechanism and find that decision-making may be biased either in favor or against the team's initially preferred alternative.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1208.
Date of creation: May 2013
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
teams; adaptation; motivation; decision–making; incentives;
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-22 (All new papers)
- NEP-CBE-2013-05-22 (Cognitive & Behavioural Economics)
- NEP-CDM-2013-05-22 (Collective Decision-Making)
- NEP-CTA-2013-05-22 (Contract Theory & Applications)
- NEP-HRM-2013-05-22 (Human Capital & Human Resource Management)
- NEP-MIC-2013-05-22 (Microeconomics)
- NEP-PPM-2013-05-22 (Project, Program & Portfolio Management)
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