A solution to the partnership problem under symmetric technologies and disutilities

Abstract

This paper characterizes the second best solution to the "partnership problem" with budget balancing under the assumption of perfect substitutability of efforts and restrictions on the disutility of efforts. In this latter regard, I assume that all partners have the same disutility index, and that it displays increasing a solute curvature ("risk aversion"). It turns out that, under these conditions, every partner will be called to provide the same level of effort in the second best allocation.