Modeling the performance of organizational structures
Operations Research
True costs of cheap labor are hard to measure: edge deletion and VCG payments in graphs
Proceedings of the 6th ACM conference on Electronic commerce
EC '06 Proceedings of the 7th ACM conference on Electronic commerce
SODA '07 Proceedings of the eighteenth annual ACM-SIAM symposium on Discrete algorithms
Combinatorial agency with audits
GameNets'09 Proceedings of the First ICST international conference on Game Theory for Networks
Mixed strategies in combinatorial agency
WINE'06 Proceedings of the Second international conference on Internet and Network Economics
The cost of moral hazard and limited liability in the principal-agent problem
WINE'10 Proceedings of the 6th international conference on Internet and network economics
Combinatorial agency of threshold functions
SAGT'11 Proceedings of the 4th international conference on Algorithmic game theory
Computing optimal contracts in combinatorial agencies
Theoretical Computer Science
Hi-index | 0.00 |
This paper studies a setting where a principal needs to motivate teams of agents whose efforts lead to an outcome that stochastically depends on the combination of agents' actions, which are not directly observable by the principal. In [1] we suggest and study a basic "combinatorial agency" model for this setting. In this paper we expose a somewhat surprising phenomenon found in this setting: cases where the principal can gain by asking agents to reduce their effort level, even when this increased effort comes for free . This phenomenon cannot occur in a setting where the principal can observe the agents' actions, but we show that it can occur in the hidden-actions setting. We prove that for the family of technologies that exhibit "increasing returns to scale" this phenomenon cannot happen, and that in some sense this is a maximal family of technologies for which the phenomenon cannot occur. Finally, we relate our results to a basic question in production design in firms.