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Sorting expertise

Author

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  • Kaya, Ayça
  • Vereshchagina, Galina

Abstract

We analyze the optimal sorting of experts who differ in their ability to acquire information, into production teams. Once a team is formed, experts individually acquire information about the joint project, communicate the information they acquired, and then engage in team production. Misalignment of preferences at the production stage creates incentives for belief manipulation at the communication stage. We show that the cost associated with misaligned incentives is minimized if experts of similar abilities are placed in the same team. Consequently, surplus maximization may lead to non-diversified teams, even if in the absence of misaligned incentives optimal sorting is negative assortative. Thus, our analysis provides a novel rationale for creation of non-diversified teams of experts.

Suggested Citation

  • Kaya, Ayça & Vereshchagina, Galina, 2022. "Sorting expertise," Journal of Economic Theory, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:jetheo:v:204:y:2022:i:c:s0022053122000874
    DOI: 10.1016/j.jet.2022.105497
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    References listed on IDEAS

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    More about this item

    Keywords

    Assortative matching; Teams; Information sharing; Expertise; Communication; Signaling;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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