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Profit-Sharing and Implementation of Efficient Outcomes

Ruben Juarez () and Kohei Nitta
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Kohei Nitta: Department of Economics, Toyo University

No 201702, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: Agents are endowed with time that is invested in different projects that generate profit depending on the allocation of time by the agents. A mechanism divides the profit generated by the projects among agents depending on the allocation of time as well as the amount of profit that every project generates. We study mechanisms that incentivize agents to contribute their time to the level that generates the maximal aggregate profit at the Nash equilibrium regardless of the production functions (efficiency). Our main result is the characterization of all the mechanisms that satisfy efficiency. Furthermore, within this class, a narrow class of mechanisms are monotone in the payoffs of the agents with respect to the addition of agents, time or projects.

Keywords: Profit-sharing; Efficiency; Implementation. (search for similar items in EconPapers)
JEL-codes: C72 D44 D71 D82 (search for similar items in EconPapers)
Date: 2017-05
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic and nep-ppm
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