Optimal Information System for Teams

Seung-Woon Yoo and Sung-Soo Yoon

Asia-Pacific Journal of Accounting & Economics, 2010, vol. 17, issue 2, 129-149

Abstract: This paper investigates an optimal information system for teams when externalities exist between team members' performance. Using a discrete model reflecting a sequential manufacturing process, we show that a team information system is better than an individual information system when the second agent utilizes information about the first agent's performance to decide her or his effort level. This decision-facilitating effect of the individual performance information increases the principal's expected costs of inducing the agent's desirable effort. In order to avoid this negative effect of the individual performance information, the principal may delay the inspection until all production processes are finished.

Date: 2010
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DOI: 10.1080/16081625.2010.9720857

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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