Optimal management of evolving hierarchies
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Optimal management of evolving hierarchies. / Hougaard, Jens Leth; Moreno-Ternero, Juan D.; Østerdal, Lars Peter .
In: Management Science, Vol. 68, No. 8, 2022, p. 6024–6038.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Optimal management of evolving hierarchies
AU - Hougaard, Jens Leth
AU - Moreno-Ternero, Juan D.
AU - Østerdal, Lars Peter
PY - 2022
Y1 - 2022
N2 - We study the optimal management of evolving hierarchies of revenue-generating agents. The initiator invests into expanding the hierarchy by adding another agent, who will bring revenues to the joint venture and who will invest herself into expanding the hierarchy further, and so on. The higher the investments (which are private information), the higher the probability of expanding the hierarchy. An allocation scheme specifies how revenues are distributed, as the hierarchy evolves. We obtain schemes that are socially optimal and initiator-optimal, respectively. Our results have potential applications for blockchain, cryptocurrencies, social mobilization, and multilevel marketing.
AB - We study the optimal management of evolving hierarchies of revenue-generating agents. The initiator invests into expanding the hierarchy by adding another agent, who will bring revenues to the joint venture and who will invest herself into expanding the hierarchy further, and so on. The higher the investments (which are private information), the higher the probability of expanding the hierarchy. An allocation scheme specifies how revenues are distributed, as the hierarchy evolves. We obtain schemes that are socially optimal and initiator-optimal, respectively. Our results have potential applications for blockchain, cryptocurrencies, social mobilization, and multilevel marketing.
U2 - 10.1287/mnsc.2021.4185
DO - 10.1287/mnsc.2021.4185
M3 - Journal article
VL - 68
SP - 6024
EP - 6038
JO - Management Science
JF - Management Science
SN - 0025-1909
IS - 8
ER -
ID: 285797169