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Sharing and Anti-Sharing in Teams

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Author Info

  • Roland Kirstein

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Robert D. Cooter

Abstract

Compared to budget-balanced Sharing contracts, Anti-Sharing may improve the efficiency of teams. The Anti-Sharer collects a fixed payment from all team members; he receives the actual output and pays out its value to them. If a team members becomes Anti-Sharer, he will be unproductive in equilibrium. Hence, internal Anti-Sharing fails to yield the first-best outcome. Anti-Sharing is more likely to yield a higher team profit than Sharing, the larger the team, the curvature of the production function, or the marginal effort cost. Sharing is more likely to be better, the greater the marginal product, the cross-partials of the production function, or the curvature of the effort cost.

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File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2007_Dateien/2007_01.pdf
File Function: First version, 2007
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Bibliographic Info

Paper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 07001.

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Length: 7 pages
Date of creation: Jan 2007
Date of revision:
Handle: RePEc:mag:wpaper:07001

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Keywords: Budget-breaker; supermodularity; constrained efficiency;

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References

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  1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  2. repec:aea:jeclit:v:43:y:2005:i:2:p:437-479 is not listed on IDEAS
  3. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  4. Choi, Yoon K., 1993. "Managerial incentive contracts with a production externality," Economics Letters, Elsevier, vol. 42(1), pages 37-42.
  5. Strausz, Roland, 1999. "Efficiency in Sequential Partnerships," Journal of Economic Theory, Elsevier, vol. 85(1), pages 140-156, March.
  6. Cooter, Robert & Porat, Ariel, 2002. "Anti-insurance," The Journal of Legal Studies, University of Chicago Press, vol. 31(2), pages 203-32, June.
  7. Eric Rasmusen, 1987. "Moral Hazard in Risk-Averse Teams," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 428-435, Autumn.
  8. Cooter, Robert D. & Porat, Ariel, 2002. "Anti-Insurance," Berkeley Olin Program in Law & Economics, Working Paper Series qt1vw0d9sf, Berkeley Olin Program in Law & Economics.
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Cited by:
  1. Kirstein, Roland & Cooter, Robert D, 2006. "Anti-Sharing as a Theory of Partnerships and Firms," Berkeley Olin Program in Law & Economics, Working Paper Series qt4441r9r1, Berkeley Olin Program in Law & Economics.
  2. Bose, Arup & Pal, Debashis & Sappington, David E.M., 2010. "Asymmetric treatment of identical agents in teams," European Economic Review, Elsevier, vol. 54(7), pages 947-961, October.

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