Project selection and execution in teams

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 det...

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Bibliographic Details
Published in:The Rand journal of economics 2016-04, Vol.47 (1), p.166-185
Main Authors: Blanes i Vidal, Jordi, Möller, Marc
Format: Article
Language:English
Subjects:
Bias
Decision analysis
Information sharing
Project management
Studies
Teams
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Summary: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.
ISSN:0741-6261
1756-2171
DOI:10.1111/1756-2171.12122