Discussion Papers of Business and Economics
Department of Business and Economics, University of Southern Denmark
Jens Leth Hougaard
Sharing the proceeds from a hierarchical venture
(), Juan D. Moreno-Ternero
(), Mich Tvede
() and Lars Peter Østerdal
Abstract: We consider the problem of distributing the proceeds
generated from a joint venture in which the participating agents are
hierarchically organized. We characterize a family of allocation rules
ranging from the so-called zero-transfer rule (which awards agents in the
hierarchy their individually generated revenues) and the full-transfer rule
(which awards all the proceeds to the agent at the top of the hierarchy).
The intermediate rule of the family imposes a sequence of transfers along
the hierarchy consistent with the so-called MIT strategy, recently singled
out as an optimal social mobilization mechanism. Our benchmark model refers
to the case of linear hierarchies, but we also extend the analysis to the
case in which hierarchies convey a general tree structure.
Keywords: Hierarchies; Joint ventures; Resource allocation; Transfer rules; MIT strategy; Axiomatic characterization; (follow links to similar papers)
JEL-Codes: C71; I10; (follow links to similar papers)
18 pages, February 19, 2015
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