TY - JOUR
T1 - Incentives and the structure of teams
AU - Franco, April Mitchell
AU - Mitchell, Matthew
AU - Vereshchagina, Galina
N1 - Funding Information:
✩ We thank Hector Chade and participants of the seminars at the University of Toronto, Arizona State University, Penn State and Queens University, as well as the participants of Midwest Theory Conference at Ohio State University, 2009 SED Annual Meeting and 2009 UBC Summer Conference on Industrial Organization. We benefited greatly from the comments of an editor and two referees. Franco and Mitchell gratefully acknowledge the support of the Social Sciences and Humanities Research Council of Canada.
PY - 2011/11
Y1 - 2011/11
N2 - 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.
AB - 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.
KW - Assortative matching
KW - Moral hazard
KW - Teams
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U2 - 10.1016/j.jet.2011.06.006
DO - 10.1016/j.jet.2011.06.006
M3 - Article
AN - SCOPUS:82155185275
SN - 0022-0531
VL - 146
SP - 2307
EP - 2332
JO - Journal of Economic Theory
JF - Journal of Economic Theory
IS - 6
ER -