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Sharing the proceeds from a hierarchical venture

Lookup NU author(s): Professor Mich Tvede

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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.

Publication metadata

Author(s): Hougaard JL, Moreno-Ternero JD, Tvede M, Østerdal LP

Publication type: Article

Publication status: Published

Journal: Games and Economic Behavior

Year: 2017

Volume: 102

Pages: 98-110

Print publication date: 01/03/2017

Online publication date: 17/11/2016

Acceptance date: 17/11/2016

Date deposited: 03/01/2017

ISSN (print): 0899-8256

ISSN (electronic): 1090-2473

Publisher: Elsevier

URL: http://dx.doi.org/10.1016/j.geb.2016.10.016

DOI: 10.1016/j.geb.2016.10.016

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