Project Selection and Execution in Teams

DOI
Publisher DOI
Abstract
We use a mechanism-design approach to study a team whose members select a joint project and exert individual efforts to execute it. Members have private information about the qualities of alternative projects. Information sharing is obstructed by a trade-off between adaptation and motivation. We determine the conditions under which first-best project and effort choices are implementable and show that these conditions can become relaxed as the team grows in size. We also characterize the second-best mechanism and find that it may include a “motivational bias,” that is, a bias in favor of the team's initially preferred project, and higher-than-optimal effort by uninformed team members.
Date Issued
2016
Publication Type
Article
Subject(s)
Language(s)
en
Author(s)
Blanes, Jordi
Additional Credits
Journal
The RAND Journal of Economics
Publisher
Wiley
ISSN
1756-2171
Access(Rights)
restricted
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