Optimal Management of Evolving Hierarchies

Jens Leth Hougaard (), Juan Moreno-Ternero and Lars Peter Østerdal
Additional contact information
Jens Leth Hougaard: Department of Food and Resource Economics, University of Copenhagen, DK-1958 Frederiksberg, Denmark; Economics, NYU Shanghai, Shanghai 200122, China

Management Science, 2022, vol. 68, issue 8, 6024-6038

Abstract: We study the optimal management of evolving hierarchies of revenue-generating agents. The initiator invests into expanding the hierarchy by adding another agent, who will bring revenues to the joint venture and who will invest herself into expanding the hierarchy further, and so on. The higher the investments (which are private information), the higher the probability of expanding the hierarchy. An allocation scheme specifies how revenues are distributed, as the hierarchy evolves. We obtain schemes that are socially optimal and initiator-optimal, respectively. Our results have potential applications for blockchain, cryptocurrencies, social mobilization, and multilevel marketing.

Keywords: optimal allocation schemes; hierarchies; multi-level marketing; Nash equilibrium; blockchain (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2021.4185 (application/pdf)

Related works:
Working Paper: Optimal Management of Evolving Hierarchies (2021)
Working Paper: Optimal Management of Evolving Hierarchies (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:8:p:6024-6038

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().