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Decision–Making and Implementation in Teams

  • Jordi Blanes i Vidal
  • Marc Möller

We use a mechanism-design approach to study a team whose members choose a joint project and exert individual efforts to execute it. Members have private information about the qualities of alternative projects. Information sharing is obstructed by a trade-off between adaptation and motivation. We determine the conditions under which first-best project and effort choices are implementable and show that these conditions can become relaxed as the team grows in size. This contrasts with the common argument (based on free-riding) that efficiency is harder to achieve in larger teams. We also characterize the second-best mechanism and find that decision-making may be biased either in favor or against the team's initially preferred alternative.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1208.

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Date of creation: May 2013
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Handle: RePEc:cep:cepdps:dp1208
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  1. Bull, Jesse & Watson, Joel, 2007. "Hard evidence and mechanism design," Games and Economic Behavior, Elsevier, vol. 58(1), pages 75-93, January.
  2. Jordi Blanes I Vidal & Marc Möller, 2007. "When Should Leaders Share Information with Their Subordinates?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 251-283, 06.
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