We use a mechanism-design approach to study a team whose members select a joint project and exert individual efforts to execute it. Members have private information about the qualities of alternative projects. Information sharing is obstructed by a trade-off between adaptation and motivation. We determine the conditions under which first-best project and effort choices are implementable and show that these conditions can become relaxed as the team grows in size. We also characterize the second-best mechanism and find that it may include a "motivational bias," that is, a bias in favor of the team's initially preferred project, and higher-than-optimal effort by uninformed team members. ? 2016 The RAND Corporation.

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1 April 2016

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The RAND Journal of Economics 47(1) , pp.166-185, , Spring, 2016

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DOI: 10.1111/1756-2171.12122

https://onlinelibrary.wiley.com/doi/10.1111/1756-2171.12122

This Journal article is published under the centre's Growth programme.