Implementation in teams

This paper considers a team production model in which the final output is a function of one or more observable intermediate variables that are functions of the actions of the team members. When there is only one intermediate variable, our model essentially reduces to the standard models in which only the final output is observable. We provide a necessary and sufficient condition for implementing an outcome. This condition imposes restrictions on the possible deviations from the outcome that can be caused by every member of the team unilaterally. As a consequence of this characterization, when there are more than one intermediate variable, we are able to show that in a broad class of problems these intermediate variables may be sufficiently informative to allow sharing rules that implement efficient outcomes. Copyright Springer-Verlag Berlin Heidelberg 2003