Equity Pay in Networked Teams

43 Pages Posted: 23 May 2023 Last revised: 4 Nov 2023

See all articles by Krishna Dasaratha

Krishna Dasaratha

Boston University

Benjamin Golub

Northwestern University

Anant Shah

Northwestern University

Date Written: May 18, 2023

Abstract

Workers contribute effort toward a team output. Each worker's effort is complementary to the efforts of specific collaborators. A principal motivates workers by paying them shares of the output. We characterize the principal's optimal allocation of shares. It satisfies a balance condition: for any agent exerting effort, the (complementarity-weighted) sum of shares held by that agent's collaborators is equal. Moreover, the subset of agents induced to work have tight-knit complementarities: any two members are collaborators or share a common collaborator. We apply our results to study how compensation and output depend on the exogenously given network of complementarities.

Suggested Citation

Dasaratha, Krishna and Golub, Benjamin and Shah, Anant, Equity Pay in Networked Teams (May 18, 2023). Available at SSRN: https://ssrn.com/abstract=4452640 or http://dx.doi.org/10.2139/ssrn.4452640

Krishna Dasaratha

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Benjamin Golub

Northwestern University ( email )

Evanston, IL 60201
United States

Anant Shah (Contact Author)

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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