We consider the problem of distributing the proceeds generated from a joint venture in which the participating agents are hierarchically organized. We characterize a family of allocation rules ranging from the so-called zero-transfer rule (which awards agents in the hierarchy their individually...

We study the optimal management of evolving hierarchies, which abound in real-life phenomena. An initiator invests into finding a subordinate, who will bring revenues to the joint venture and who will invest herself into finding another subordinate, and so on. The higher the individual...