Vakhtang Abashidze
I am a Ph.D. Candidate in economics at Humboldt-Universität zu Berlin and Berlin School of Economics.My interests are in Microeconomic theory, Game Theory, Mechanism Design, and Contract Theory.
Job Market Paper: Team Formation with Other-regarding Preferences
ABSTRACT: This paper studies team formation under moral hazard when agents differ in their other-regarding preferences. A principal assigns 2N agents to N identical two-person projects and designs contracts. The main result shows that, under pure altruism, the cost-minimizing team formation is anti-assortative: pairing agents from opposite ends of the altruism distribution. The intuition is straightforward: less altruistic agents require higher incentive pay, while more altruistic coworkers value this pay and therefore require weaker incentives. Consequently, balancing the level of altruism across teams minimizes expected compensation costs. The anti-assortative formation rule extends to reciprocal altruism and holds under unique implementation and spiteful preferences.