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Supermodularity and incentive reversal in teams

Author

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  • Boyarchenko, Svetlana
  • Machowska, Dominika
  • Topolyan, Iryna

Abstract

This paper takes a new look at the issue of incentive reversal in (strategic) team games, by relying on supermodularity techniques. In a setting with no contractual possibilities, we provide minimal sufficient conditions for one or both players to supply less effort in exogenously more productive environments, at the two extremal Nash equilibria. Unlike the existing literature, the analysis does not utilize concavity and other unnecessary assumptions and explicitly takes into account existence and possible multiplicity of pure-strategy Nash equilibria. We derive respective sufficient conditions for strong and weak incentive reversal for asymmetric games under strategic complementarity and substitutability respectively. We also consider incentive reversal for a broad class of symmetric games. These parsimonious conditions allow for a more transparent intuitive interpretation of the results.

Suggested Citation

  • Boyarchenko, Svetlana & Machowska, Dominika & Topolyan, Iryna, 2025. "Supermodularity and incentive reversal in teams," Games and Economic Behavior, Elsevier, vol. 150(C), pages 93-105.
  • Handle: RePEc:eee:gamebe:v:150:y:2025:i:c:p:93-105
    DOI: 10.1016/j.geb.2024.12.001
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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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