Fostering collaboration

Joyee Deb (), Aditya V. Kuvalekar () and Elliot Lipnowski ()
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Joyee Deb: Department of Economics, New York University
Aditya V. Kuvalekar: Department of Economics, University of Essex
Elliot Lipnowski: Department of Economics, Yale University

Theoretical Economics, Forthcoming

Abstract: We study project selection and development by a principal, interacting with two agents each of whom wants their respective project selected. When the best choice is uncertain, keeping both projects alive gives the principal the ability to adapt its choice in the future, but implies an efficiency loss of effort being spent on the project finally not chosen. We show a time-varying threshold rule is uniquely optimal: the principal selects the first project to achieve a sufficient lead. The optimum entails initial competition, always followed by permanent collaboration. Our proof uses martingale time-change methods applying weak solutions.

Keywords: Project selection; internal competition; team production; collaboration; mechanism design without transfers (search for similar items in EconPapers)
JEL-codes: D72 D73 D82 D86 (search for similar items in EconPapers)
Date: 2025-03-17
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