Sharing the proceeds from a hierarchical venture

Jens Hougaard (), Juan Moreno-Ternero, Mich Tvede and Lars Peter Østerdal

No 2/2015, Discussion Papers on Economics from University of Southern Denmark, Department of Economics

Abstract: We consider the problem of distributing the proceeds generated from a joint venture in which the participating agents are hierarchically organized. We characterize a family of allocation rules ranging from the so-called zero-transfer rule (which awards agents in the hierarchy their individually generated revenues) and the full-transfer rule (which awards all the proceeds to the agent at the top of the hierarchy). The intermediate rule of the family imposes a sequence of transfers along the hierarchy consistent with the so-called MIT strategy, recently singled out as an optimal social mobilization mechanism. Our benchmark model refers to the case of linear hierarchies, but we also extend the analysis to the case in which hierarchies convey a general tree structure.

Keywords: Hierarchies; Joint ventures; Resource allocation; Transfer rules; MIT strategy; Axiomatic characterization (search for similar items in EconPapers)
JEL-codes: C71 I10 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2015-02-19
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Sharing the proceeds from a hierarchical venture (2017)
Working Paper: Sharing the proceeds from a hierarchical venture (2017)
Working Paper: Sharing the proceeds from a hierarchical venture (2016)
Working Paper: Sharing the proceeds from a hierarchical venture (2015)
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