Incentives and the structure of teams

April Mitchell Franco, Matthew Mitchell, Galina Vereshchagina

Research output: Contribution to journalArticle

12 Scopus citations

Abstract

This paper studies the relationship between moral hazard and the matching structure of teams. We show that team incentive problems may generate monotone matching predictions in the absence of complementarities in the production technology. Second, we analyze how complementarity in the underlying technology affects the matching predictions arising due to moral hazard. We find that (i) even when the production technology is strongly complementary, the incentive problem may lead to formation of negatively sorted teams; (ii) as the degree of complementarity increases, the optimal matching structure may switch from positive to negative, solely due to the need to provide incentives.

Original languageEnglish (US)
Pages (from-to)2307-2332
Number of pages26
JournalJournal of Economic Theory
Volume146
Issue number6
DOIs
StatePublished - Nov 1 2011

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Keywords

  • Assortative matching
  • Moral hazard
  • Teams

ASJC Scopus subject areas

  • Economics and Econometrics

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