Optimal Management of Evolving Hierarchies

Jens L. Hougaard (), Juan Moreno-Ternero and Lars Peter Østerdal
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Jens L. Hougaard: Department of Food and Resource Economics, University of Copenhagen

No 21.15, Working Papers from Universidad Pablo de Olavide, Department of Economics

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 multi-level marketing.

Keywords: Optimal allocation schemes; Hierarchies; Management; Nash equilibrium; Blockchain. (search for similar items in EconPapers)
JEL-codes: C70 L24 M52 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2021
New Economics Papers: this item is included in nep-gth and nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Optimal Management of Evolving Hierarchies (2022)
Working Paper: Optimal Management of Evolving Hierarchies (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:21.15

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