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Title: Relational team contract and inequity aversion
Author: Li, Yihang
Awarding Body: University of Bath
Current Institution: University of Bath
Date of Award: 2018
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The Thesis studies moral hazard problem in teams. We consider team production models where incentive can be provided through explicit sharing and relational contract. Incentive provision is discussed under various information structures. Under deterministic production, the output itself act as a strong signal of deterring shirking, thus noisy soft signal would not help to improve efficiency. While in cases where soft information is sufficient to infer agents' effort, we show that the optimal sharing would concentrate negative sharing on one agent who will be fully motivated by relational incentive. We further studied a model with sub-teams where sub-team performances are deterministic signals to sub-team members' effort. The value of the certainty in the soft information crucially depends on the structure of the sub-teams. Once we can ensure some heterogeneity between the organizational structure within the sub-teams, strongest relational incentive can be provided to cope with unilateral deviation. A necessary and sufficient condition for implementing a target effort level is then provided under general sharing. However, once we restrict the sharing rule to be linear, utilities among agents are no longer transferable. We show that linear sharing can implement the efficient effort, but with more restrictions on surplus distributions among agents. In general, linear sharing can be applied without loss of generality only if the surplus distribution is relatively balanced. Finally we had some preliminary discussion of non-monetary incentive provision based on inequality aversion model on linear public good games. Applying Fehr and Schmidt [1999]'s model with Bayesian game technique, we explore a boarder range of equilibriums with positive contributions. However, equilibrium behavior relies on how inequality is defined among players, future theoretical and experimental work needs to be done to enable inequality aversion as a tool of incentive provision.
Supervisor: Nandeibam, Shasikanta ; Postl, Peter Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available