Social Sciences Brown Bag Seminar

I study a dynamic problem in which a group of agents collaborate over time to complete a project. The project progresses at a rate that depends on the agents' efforts, and it generates a payoff upon completion. I show that agents work harder the closer the project is to completion, and members of a larger team work harder than members of a smaller team - both individually and on aggregate - if and only if the project is sufficiently far from completion. I apply these results to determine the optimal size of a self-organized partnership, and to study the manager's problem who recruits agents to carry out a project, and must determine the team size and its members' incentive contracts. The main results are (i) that the optimal symmetric contract compensates the agents only upon completing the project, and (ii) the optimal team size decreases in the expected length of the project.