Joint Production in Teams

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Joint Production in Teams

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Battaglini, Marco

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Marco Battaglini

Abstract

Consider Holmström.s moral hazard in teams problem when there are n agents, each agent i has a a(i)-dimensional strategy space and output can be m-dimensional. We show that a compensation mechanism that satisfies budget balance, limited liability and implements an efficient allocation generically exists if and only if Sum_a(i)/(n-1)< m. When this condition is satisfied, the optimal mechanism discourages collusive behavior and, under a weak condition, filters out inefficient equilibria.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4702.

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Date of creation: Oct 2004
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Handle: RePEc:cpr:ceprdp:4702

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Article
- Battaglini, Marco, 2006. "Joint production in teams," Journal of Economic Theory, Elsevier, vol. 130(1), pages 138-167, September. [Downloadable!] (restricted)

Find related papers by JEL classification:
D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

This paper has been announced in the following NEP Reports:

NEP-ALL-2005-02-13 (All new papers)
NEP-MIC-2005-02-13 (Microeconomics)

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Áron Kiss, 2009. "Coalition politics and accountability," Public Choice, Springer, vol. 139(3), pages 413-428, June. [Downloadable!] (restricted)
Jianpei Li, 2009. "Team production with inequity-averse agents," Portuguese Economic Journal, Springer, vol. 8(2), pages 119-136, August. [Downloadable!] (restricted)
Alex Gershkov & Jianpei Li & Paul Schweinzer, 2006. "Collective Production and Incentives," Discussion Papers 186, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]

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