IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v44y2023i1p244-250.html

Profit sharing with a contest among agents

Author

Listed:
  • Chong Wang
  • Mingli Zheng

Abstract

We consider how an internal competition in the form of a contest among agents can be combined with profit sharing in team production. The principal can choose to share between the principal and the agents as well as the sharing rule with a competitive contest among the agents. We show that under some conditions, a pure strategy equilibrium of profit sharing exists. In equilibrium, internal sharing involves a contest that is more competitive than proportional sharing, and the principal can get higher profit compared to proportional sharing.

Suggested Citation

  • Chong Wang & Mingli Zheng, 2023. "Profit sharing with a contest among agents," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 244-250, January.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:244-250
    DOI: 10.1002/mde.3677
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/mde.3677
    Download Restriction: no
    File URL: https://libkey.io/10.1002/mde.3677?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. PHLIPS, Louis, 1978. "The demand for leisure and money," LIDAM Reprints CORE 342, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Damian S. Damianov & Shane Sanders & Anil Yildizparlak, 2018. "Asymmetric endogenous prize contests," Theory and Decision, Springer, vol. 85(3), pages 435-453, October.
    3. Heywood, John S. & Jirjahn, Uwe, 2009. "Profit sharing and firm size: The role of team production," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 246-258, August.
    4. Dong, Lu & Falvey, Rod & Luckraz, Shravan, 2019. "Fair share and social efficiency: A mechanism in which peers decide on the payoff division," Games and Economic Behavior, Elsevier, vol. 115(C), pages 209-224.
    5. Phlips, Louis, 1978. "The Demand for Leisure and Money," Econometrica, Econometric Society, vol. 46(5), pages 1025-1043, September.
    6. Alex Gershkov & Jianpei Li & Paul Schweinzer, 2009. "Efficient tournaments within teams," RAND Journal of Economics, RAND Corporation, vol. 40(1), pages 103-119, March.
    7. Anthony M. Marino & Ján Zábojník, 2004. "Internal Competition for Corporate Resources and Incentives in Teams," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 710-727, Winter.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bruno Théret & Didier Uri, 1988. "La courbe de Laffer dix ans après : un essai de bilan critique," Revue Économique, Programme National Persée, vol. 39(4), pages 753-808.
    2. repec:aia:aiaswp:123 is not listed on IDEAS
    3. Ohto Kanninen & Petri Böckerman & Ilpo Suoniemi, 2026. "Income–Well‐Being Gradient in Sickness and Health," Health Economics, John Wiley & Sons, Ltd., vol. 35(3), pages 409-422, March.
    4. Kanninen, Ohto & Böckerman, Petri & Suoniemi, Ilpo, 2018. "Domain-Specific Risk and Public Policy," IZA Discussion Papers 11539, IZA Network @ LISER.
    5. Michael J. Moore & Philip J. Cook, 1995. "Habit and Heterogeneity in the Youthful Demand for Alcohol," NBER Working Papers 5152, National Bureau of Economic Research, Inc.
    6. Ola Andersson & Pol Campos‐Mercade & Fredrik Carlsson & Florian H. Schneider & Erik Wengström, 2022. "The impact of stay‐at‐home policies on individual welfare," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(2), pages 340-362, April.
    7. Petr Petera & Jana Fibírová, 2015. "Basic Approaches to Profit-Sharing and Ideas for Utilization [Základní přístupy k "profit-sharingu" a náměty na další využití]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2015(3), pages 97-117.
    8. Talpule, Ashok, 1980. "Effects on the Supply of Labour Hours by Employees of Changes in their Conditions of Employment," Impact Project Archive 295073, Impact Research Centre, University of Melbourne.
    9. Matsuzawa, Satoshi, 2024. "Optimal incentive power for inter-team competition," Economics Letters, Elsevier, vol. 239(C).
    10. repec:eee:labchp:v:1:y:1986:i:c:p:3-102 is not listed on IDEAS
    11. Powell, Alan, 1980. "Aspects of the design on BACHUROO, An Economic-Demographic Model of Labour Supply," Impact Project Archive 295072, Impact Research Centre, University of Melbourne.
    12. Vendrik, Maarten C. M., 1998. "Unstable bandwagon and habit effects on labor supply," Journal of Economic Behavior & Organization, Elsevier, vol. 36(2), pages 235-255, August.
    13. Bossavie, Laurent & Cho, Yoonyoung & Heath, Rachel, 2023. "The effects of international scrutiny on manufacturing workers: Evidence from the Rana Plaza collapse in Bangladesh," Journal of Development Economics, Elsevier, vol. 163(C).
    14. Long, Richard J. & Fang, Tony, 2013. "Profit Sharing and Workplace Productivity: Does Teamwork Play a Role?," IZA Discussion Papers 7869, IZA Network @ LISER.
    15. Roman Inderst & Manuel Klein, 2007. "Innovation, endogenous overinvestment, and incentive pay," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 881-904, December.
    16. Falvey, Rod & Lane, Tom & Luckraz, Shravan, 2025. "On a mechanism that improves efficiency and reduces inequality in voluntary contribution games," Games and Economic Behavior, Elsevier, vol. 150(C), pages 518-536.
    17. Pull, Kerstin & Stadler, Manfred, 2015. "Contests vs. piece rates in product market competition," University of Tübingen Working Papers in Business and Economics 85, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    18. Kräkel, Matthias, 2010. "Shutdown Contests in Multi-Plant Firms and Governmental Intervention," Bonn Econ Discussion Papers 03/2010, University of Bonn, Bonn Graduate School of Economics (BGSE).
    19. Walter Ferrarese, 2018. "Equilibrium Effort in Games with Homogeneous Production Functions and Homogeneous Valuation," CEIS Research Paper 432, Tor Vergata University, CEIS, revised 12 Nov 2021.
    20. Hoffmann, Magnus & Rota-Graziosi, Grégoire, 2012. "Endogenous timing in general rent-seeking and conflict models," Games and Economic Behavior, Elsevier, vol. 75(1), pages 168-184.
    21. Shaun P. Hargreaves Heap & Abhijit Ramalingam & Brock K. Stoddard, 2018. "Within-group inequality in inter-group competition," Working Papers 18-17, Department of Economics, Appalachian State University.
    22. Dario Blanco-Fernandez & Stephan Leitner & Alexandra Rausch, 2022. "Interactions between the individual and the group level in organizations: The case of learning and autonomous group adaptation," Papers 2203.09162, arXiv.org.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:44:y:2023:i:1:p:244-250. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.