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Sharing the proceeds from a hierarchical venture

Publication: Research - peer-reviewJournal article

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

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 languageEnglish
JournalGames and Economic Behavior
Volume102
Pages (from-to)98–110
Number of pages13
ISSN0899-8256
DOIs
StatePublished - 2017

ID: 169433722