Optimal Team Size and Monitoring in Organizations

  title={Optimal Team Size and Monitoring in Organizations},
  author={Pierre Jinghong Liang},
We formulate and analyze a model of team structure and monitoring within a Linear-Exponential-Normal (LEN) agency framework. We incorporate three key instruments in the internal design of an organization involving team production: team size, monitoring activities, and incentive contracts. We show that the complex tradeoffs among these instruments lead to surprisingly simple implications. One such result is that the equilibrium level of pay-for-performance for workers is attenuated and is, at… CONTINUE READING

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