Third-Party Budget Breakers and Side-Contracting in Team Production
AbstractIn a team production problem with unverifiable effort, budget breaking is essential to implementing efficient levels of effort. This short paper considers the use of a third party, who does not exert effort, in a setting with general contracts that can include message games, as a way to remove resources from the team. We show that if side contracting can influence behavior in a message game in the original contract, the addition of the third party is not helpful. Additionally, we compare our view of side contracting with that of Baliga and Sjostrom (2009) to explore the nature of side contracting that is needed in order for the third party to be useful for budget breaking.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0909.
Length: 13 pages
Date of creation: Apr 2009
Date of revision:
Other versions of this item:
- Jesse Bull, 2012. "Third-Party Budget Breakers and Side Contracting in Team Production," Economics Bulletin, AccessEcon, vol. 32(3), pages 2606-2614.
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-23 (All new papers)
- NEP-CDM-2009-05-23 (Collective Decision-Making)
- NEP-CTA-2009-05-23 (Contract Theory & Applications)
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.:
- Sandeep Baliga & Tomas Sjostrom, 2005.
"Contracting with Third Parties,"
784828000000000408, UCLA Department of Economics.
- Bengt Holmstrom, 1982.
"Moral Hazard in Teams,"
Bell Journal of Economics,
The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
- Bull, Jesse & Watson, Joel, 2000.
"Evidence Disclosure and Verifiability,"
University of California at San Diego, Economics Working Paper Series
qt6th0060j, Department of Economics, UC San Diego.
- Bull, Jesse & Watson, Joel, 2002. "Evidence Disclosure and Verfiability," University of California at San Diego, Economics Working Paper Series qt19p7z2gm, Department of Economics, UC San Diego.
- Watson, Joel & Buzard, Kristy, 2009. "Contract, Renegotiation, and Hold Up: General Results on the Technology of Trade and Investment," University of California at San Diego, Economics Working Paper Series qt3923q7kz, Department of Economics, UC San Diego.
- Watson, Joel & Buzard, Kristy, 2012.
"Contract, renegotiation, and hold up: Results on the technology of trade and investment,"
Econometric Society, vol. 7(2), May.
- Buzard, Kristy & Watson, Joel, 2010. "Contract, Renegotiation, and Hold Up: Results on the Technology of Trade and Investment," University of California at San Diego, Economics Working Paper Series qt3df3q4vg, Department of Economics, UC San Diego.
- Watson, Joel & Wignall, Chris, 2009. "Hold-Up and Durable Trading Opportunities," University of California at San Diego, Economics Working Paper Series qt8p8284wg, Department of Economics, UC San Diego.
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