Sharing the proceeds from a hierarchical venture

Jens Lars Hougaard, Juan D. Moreno-Ternero, Mich Tvede, Lars Peter Østerdal

Research output: Contribution to journalArticle

8 Citations (Scopus)
14 Downloads (Pure)

Abstract

We consider the problem of distributing the proceeds generated from a joint venture in which the participating agents are hierarchically organized. We introduce and characterize a family of allocation rules where revenue ‘bubbles up’ in the hierarchy. The family is flexible enough to accommodate the no-transfer rule where no revenue bubbles up) and the full-transfer rule (where all the revenues bubble up to the top of the hierarchy). Intermediate rules within the family are reminiscent of popular incentive mechanisms for social mobilization or multi-level marketing.
Original languageEnglish
Pages (from-to)98-110
Number of pages13
JournalGames and Economic Behavior
Volume102
Early online date17 Nov 2016
DOIs
Publication statusPublished - Mar 2017

Keywords

  • Hierarchies
  • Joint ventures
  • Resource allocation
  • Geometric rules
  • MIT strategy

Cite this