Review of Economic Studies Vol. 82 No. 1 2015
Projects and Team Dynamics
Abstract
I study a dynamic problem in which a group of agents collaborate over time to complete a project. The project progresses at a rate that depends on the agents' efforts, and it generates a pay-off upon completion. I show that agents work harder the closer the project is to completion, and members of a larger team work harder than members of a smaller team—both individually and on aggregate—if and only if the project is sufficiently far from completion. I apply these results to determine the optimal size of a self-organized partnership, and to study the manager's problem who recruits agents to carry out a project, and must determine the team size and its members' incentive contracts. The main results are: (i) that the optimal symmetric contract compensates the agents only upon completing the project; and (ii) the optimal team size decreases in the expected length of the project.
- DOI
- 10.1093/restud/rdu031
- Volume
- 82
- Issue
- 1
- Pages
- 187-218
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref