Sorting expertise

Ayça Kaya and Galina Vereshchagina

Journal of Economic Theory, 2022, vol. 204, issue C

Abstract: We analyze the optimal sorting of experts who differ in their ability to acquire information, into production teams. Once a team is formed, experts individually acquire information about the joint project, communicate the information they acquired, and then engage in team production. Misalignment of preferences at the production stage creates incentives for belief manipulation at the communication stage. We show that the cost associated with misaligned incentives is minimized if experts of similar abilities are placed in the same team. Consequently, surplus maximization may lead to non-diversified teams, even if in the absence of misaligned incentives optimal sorting is negative assortative. Thus, our analysis provides a novel rationale for creation of non-diversified teams of experts.

Keywords: Assortative matching; Teams; Information sharing; Expertise; Communication; Signaling (search for similar items in EconPapers)
JEL-codes: C78 D21 D82 D83 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:204:y:2022:i:c:s0022053122000874

DOI: 10.1016/j.jet.2022.105497

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