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 language | English |
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Pages (from-to) | 98-110 |
Number of pages | 13 |
Journal | Games and Economic Behavior |
Volume | 102 |
Early online date | 17 Nov 2016 |
DOIs | |
Publication status | Published - Mar 2017 |
Keywords
- Hierarchies
- Joint ventures
- Resource allocation
- Geometric rules
- MIT strategy