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Anti-Sharing

Author

Listed:
  • Kirstein, Roland
  • Cooter, Robert

Abstract

The paper proposes a mechanism that may implement first-best effort in simultaneous teams. Within the framework of this mechanism, each team members is obliged to make a fixed, non-contingent payment, and chooses his individual effort. After the output is produced, each team member receives a gross payment that equals the actual team output. We demonstrate that a Nash equilibrium exists in which each team member chooses first-best effort. We call this mechanism ?Anti-Sharing? since it solves the sharing problem that causes the inefficiency in teams. The Anti-Sharing mechanism requires one player to specialize on the role of an ?Anti-Sharer?. With an external Anti-Sharer who works on a non-profit base, the mechanism can implement first-best effort. If, however, the Anti-Sharer comes from within the team and desires a positive payoff, then the mechanism may implement not more than second-best effort. The latter version of the model could be interpreted as a new theory of firms and partnerships in the sense of the theory of Alchian and Demsetz (1972).

Suggested Citation

  • Kirstein, Roland & Cooter, Robert, 2003. "Anti-Sharing," CSLE Discussion Paper Series 2003-02, Saarland University, CSLE - Center for the Study of Law and Economics.
  • Handle: RePEc:zbw:csledp:200302
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    File URL: https://www.econstor.eu/bitstream/10419/23131/1/2003-02_antiteam.pdf
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    References listed on IDEAS

    as
    1. Christoph L├╝lfesmann, 2001. "Team Production, Sequential Investments, and Stochastic Payoffs," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, T├╝bingen, vol. 157(3), pages 430-430, September.
    2. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    3. A. Mitchell Polinsky & Daniel L. Rubinfeld, 2003. "Aligning the Interests of Lawyers and Clients," American Law and Economics Review, Oxford University Press, vol. 5(1), pages 165-188.
    4. Eric Rasmusen, 1987. "Moral Hazard in Risk-Averse Teams," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 428-435, Autumn.
    5. Cooter, Robert D. & Porat, Ariel, 2002. "Anti-Insurance," Berkeley Olin Program in Law & Economics, Working Paper Series qt1vw0d9sf, Berkeley Olin Program in Law & Economics.
    6. Varian, Hal R, 1994. "A Solution to the Problem of Externalities When Agents Are Well-Informed," American Economic Review, American Economic Association, vol. 84(5), pages 1278-1293, December.
    7. Choi, Yoon K., 1993. "Managerial incentive contracts with a production externality," Economics Letters, Elsevier, vol. 42(1), pages 37-42.
    8. Strausz, Roland, 1999. "Efficiency in Sequential Partnerships," Journal of Economic Theory, Elsevier, vol. 85(1), pages 140-156, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Efficient Effort in Teams; Second-Best Solution; Partnerships;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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