Project selection and execution in teams

• Autores: Jordi Blanes Vidal, Marc Möller
• Localización: The Rand Journal of Economics, ISSN-e 1756-2171, Vol. 47, Nº. 1, 2016, págs. 166-185
• Idioma: inglés
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• Resumen

  • 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.