(DP 1991-14) Rotten Kid Transfers and Pareto Efficiency in Nonsymmetric Teams

Abstract

We show that there is an exhaustive sharing scheme involving "rotten kid transfers" that allow Pareto efficiency in nonsymmetric teams where at least one member is team-spirited. The optimal "rotten kid transfers" from team-spirited members required to keep self-interested members from shirking are determined. If the affordability condition is satisfied, the optimal "rotten kid transfers" induce Pareto efficiency in teams.