Procrastination in teams and contract design
13 Citations•2016•
Philipp Weinschenk
It is shown that deadlines are not beneficial for a team, provided that players can choose efforts frequently and design contracts optimally, and that the team's ability to write discriminatory contracts is therefore central.
Abstract
We study a dynamic model of team production with moral hazard. We show that players might procrastinate to exploit the future externalities of team production. Contract design is shown to be a powerful tool to mitigate the problem of procrastination and enhance efficiency. The team's ability to write discriminatory contracts is therefore central. We also show that deadlines are not beneficial for a team, provided that players can choose efforts frequently and design contracts optimally.