Joint Production in Teams

Marco Battaglini ()

No 4702, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Consider Holmström.s moral hazard in teams problem when there are n agents, each agent i has a a(i)-dimensional strategy space and output can be m-dimensional. We show that a compensation mechanism that satisfies budget balance, limited liability and implements an efficient allocation generically exists if and only if Sum_a(i)/(n-1)< m. When this condition is satisfied, the optimal mechanism discourages collusive behavior and, under a weak condition, filters out inefficient equilibria.

Keywords: incentives; moral hazard; teams; theory of the firm (search for similar items in EconPapers)
JEL-codes: D23 D82 J33 L23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mic
Date: 2004-10

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Journal Article: Joint production in teams (2006)
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