Projects and Team Dynamics
Review of Economic Studies, Forthcoming
64 Pages Posted: 9 Aug 2011 Last revised: 4 Jul 2014
Date Written: April 16, 2014
Abstract
I study a dynamic problem in which a group of agents collaborate over time to complete a project. The project progresses at a rate that depends on the agents' efforts, and it generates a payoff upon completion. I show that agents work harder the closer the project is to completion, and members of a larger team work harder than members of a smaller team - both individually and on aggregate - if and only if the project is sufficiently far from completion. I apply these results to determine the optimal size of a self-organized partnership, and to study the manager's problem who recruits agents to carry out a project, and must determine the team size and its members' incentive contracts. The main results are (i) that the optimal symmetric contract compensates the agents only upon completing the project, and (ii) the optimal team size decreases in the expected length of the project.
Keywords: Projects, moral hazard in teams, team formation, partnerships, differential games
JEL Classification: C73, H41, J24, M5
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Free Rider Problem: A Dynamic Analysis
By Marco Battaglini, Salvatore Nunnari, ...
-
Achievable Outcomes of Dynamic Contribution Games, Second Version
-
Dynamic Voluntary Contributions to a Discrete Public Good: Experimental Evidence
By Pavel Diev and Walid Hichri
-
Delay and Deadlines: Freeriding and Information Revelation in Partnerships
By Arthur Campbell, Florian Ederer, ...
-
Project Design with Limited Commitment and Teams
By George Georgiadis, Steven A. Lippman, ...
-
Continuous-Time Public Good Contribution Under Uncertainty
By Giorgio Ferrari, Frank Riedel, ...