Incentives to Help in Multi-agent Situations

Hideshi Itoh

Econometrica, 1991, vol. 59, issue 3, 611-36

Abstract: This paper concerns moral hazard problems in multiagent situations where cooperation is an issue. Each agent allocates effort to his own task and to other tasks as "help." The principal may prefer an unambiguous division of labor by inducing each agent to specialize in his own task, or prefer teamwork where each agent is motivated to help other agents. A sufficient condition for teamwork to be optimal is presented. A nonconvexity of the optimal task structure is also shown: the principal wants either strict specialization or substantial teamwork. Copyright 1991 by The Econometric Society.

Date: 1991
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