Dorothea K Herreiner, Economics Department, Bowdoin College
Abstract:
Imagine a firm which relies on production or design teams. Often there
are many groups working on a similar or the same project contemporaneously
but independently of each other. All groups need the same knowledge and
capabilities to succeed. If the firm does not want to assign workers to
specific groups, workers have to form groups on their own. The properties
of such a process and the incentives the firm can give to achieve optimal
group formation are discussed in this paper.
In more formal terms: a population of fixed size consists of agents of
different types. These agents form groups such that each group has exactly
one person of each type. A decentralized group formation procedure is
investigated in which agents have to find their matching partners
themselves. The paper characterizes the type distribution in the
population which maximizes the expected number of groups that form
for any group size.
Keywords: Matching, Search, Decentralized Markets
JEL Classification: C78, D40, J64
Current Version: February 2002.