Sharing the proceeds from a hierarchical venture

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

doi:10.1016/j.geb.2016.10.016

Sharing the proceeds from a hierarchical venture

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

Economics

Research output: Contribution to journal › Article › peer-review

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 (US)
Pages (from-to)	98-110
Number of pages	13
Journal	Games and Economic Behavior
Volume	102
DOIs	https://doi.org/10.1016/j.geb.2016.10.016
State	Published - Mar 1 2017

Keywords

Geometric rules
Hierarchies
Joint ventures
MIT strategy
Resource allocation

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.geb.2016.10.016

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title = "Sharing the proceeds from a hierarchical venture",

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 {\textquoteleft}bubbles up{\textquoteright} 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.",

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AU - Østerdal, Lars Peter

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AB - 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.

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KW - Hierarchies

KW - Joint ventures

KW - MIT strategy

KW - Resource allocation

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Sharing the proceeds from a hierarchical venture

Abstract

Keywords

ASJC Scopus subject areas

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