Research | Song Yangbo: Network-based Peer Monitoring Design

Release time：10 April 2025

In today’s highly competitive business environment, management effectiveness is crucial to the success of an enterprise or organization. In particular, the incentive mechanism design is one of the core issues of organizational management. However, with the popularization of cross-departmental collaboration and the rise of global teams in the post-epidemic era, complex and diverse team situations often, to some extent, challenge the implementation of specific supervision and incentive mechanisms by organizational managers.

Network-based Peer Monitoring Design, a collaborative research by Professor Song Yangbo (Darcy) from the School of Management and Economics (SME), The Chinese University of Hong Kong, Shenzhen (CUHK-Shenzhen), and Professor Lu Zhuoran from the Antai College of Economics & Management, Shanghai Jiao Tong University, focuses on team incentive design, constructing a multi-agent collaboration framework based on network topology to study how the principal makes the optimal incentive for all employees through task allocation sequence and reward mechanism design in the context of unobservable agent actions yet endogenous peer monitoring networks. For several typical network topological structures, the authors derived clear characteristics of the optimal allocation sequence and proposed two new measurement indicators, namely, total cost and stability, for principals to rank these networks. This research not only provides new ideas for the academic community to study team incentive design but also lends valuable theoretical basis and practical reference for actual organizational managers to design reasonable incentive mechanisms in complex network environments for better team performance. It was published in the Journal of Economic Theory, a top journal in economics.