Profit Sharing and Incentives
Ozdenoren E. Rubanov O.
July 2022Elsevier Inc.
International Journal of Industrial Organization
2022#83
We model a firm as a team production process subject to moral hazard and derive the optimal profit sharing scheme between productive workers and outside investors together with incentive contracts based on noisy performance signals. More productive agents with noisier performance signals are more likely to receive shares which can explain why managers are motivated by shares, and law or consulting firms form partnerships. A firm that grows by opening branches is held almost entirely by outside investors when its output noise grows faster than the number of branches. Otherwise, insiders hold substantial amount of a large firms shares.
Incentives , Moral hazard , Partnerships , Profit sharing , Team production
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Department of Economics, London Business School, Regents Park, London, NW1 4SA, United Kingdom
Department of Economics, Nazarbayev University, Qabanbay Batyr ave. 53, Nur-Sultan, 010000, Kazakhstan
Department of Economics
Department of Economics
10 лет помогаем публиковать статьи Международный издатель
Книга Публикация научной статьи Волощук 2026 Book Publication of a scientific article 2026