Sharing the Proceeds from a Hierarchical Venture

Jens Leth Hougaard, Juan D. Moreno-Ternero, Mich Tvede, Lars Peter Østerdal

Research output: Working paperResearch


We consider the problem of distributing the proceeds generated from a joint venture in which the participating agents are hierarchically organized. We introduce and characterize a family of allocation rules where revenue `bubbles up' in the hierarchy. The family is flexible enough to accommodate a no-transfer rule (where no revenue bubbles up) and a full-transfer rule (where all the revenues bubble up to the top of the hierarchy). Intermediate rules within the family are reminiscent of popular incentive mechanisms for social mobilization. Our benchmark model refers to the case of linear hierarchies, but we also extend the analysis to the case in which hierarchies may convey a general tree structure and include joint ownerships.
Original languageEnglish
Place of PublicationLouvain
PublisherCenter for Operations Research and Econometrics, Université Catholique de Louvain
Number of pages24
Publication statusPublished - Jul 2015
Externally publishedYes
SeriesCORE Discussion Paper


  • Hierarchies
  • Joint ventures
  • Resource allocation
  • Transfer rules
  • MIT strategy

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