How to Share it Out: The Value of Information in Teams

44 Pages Posted: 14 Aug 2014

See all articles by Alex Gershkov

Alex Gershkov

Hebrew University of Jerusalem; University of Surrey - School of Economics

Li Jianpei

University of International Business and Economics (UIBE)

Paul Schweinzer

University of Klagenfurt

Date Written: July 30, 2014

Abstract

We study the role of information exchange, leadership and coordination in team or partnership structures. For this purpose, we view individuals jointly engaging in productive processes — a ‘team’ — as endowed with individual and privately held information on the joint production process. Once individual information is shared, team members decide individually on the effort they exert in the joint production process. This effort, however, is not contractible; only the joint output (or profit) of the team can be observed. Our central question is whether or not incentives can be provided to a team in this environment such that team members communicate their private information and exert efficient productive efforts on the basis of this communication. Our main result shows that there exists a simple ranking-based contract which implements both desiderata in a wide set of situations.

Keywords: moral hazard, adverse selection, leadership, teams

JEL Classification: C700, D700, D800, L200

Suggested Citation

Gershkov, Alex and Jianpei, Li and Schweinzer, Paul, How to Share it Out: The Value of Information in Teams (July 30, 2014). CESifo Working Paper Series No. 4906, Available at SSRN: https://ssrn.com/abstract=2479839 or http://dx.doi.org/10.2139/ssrn.2479839

Alex Gershkov

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

HOME PAGE: http://pluto.huji.ac.il/~alexg/

University of Surrey - School of Economics ( email )

Guildford, Surrey GU2 7XH
United Kingdom

Li Jianpei

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Paul Schweinzer (Contact Author)

University of Klagenfurt ( email )

Universitätsstrasse 65-67
Klagenfurt, Carinthia A-9020
Austria

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