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Conflicting Tasks and Moral Hazard: Theory and Experimental Evidence

Eva Hoppe and David Kusterer

No 01-04, Cologne Graduate School Working Paper Series from Cologne Graduate School in Management, Economics and Social Sciences

Abstract: We study a multi-task principal-agent problem in which tasks can be in direct conflict with each other. In theory, it is difficult to induce a single agent to exert efforts in two conflicting tasks, because effort in one task decreases the success probability of the other task. We have conducted an experiment in which we find strong support for the relevance of this incentive problem. In the presence of conflict, subjects choose two efforts significantly less often when both tasks are assigned to a single agent than when there are two agents each in charge of one task.

Keywords: moral hazard; conflicting tasks; experiment (search for similar items in EconPapers)
JEL-codes: D86 C90 M54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-exp
Date: 2010-08-24
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Journal Article: Conflicting tasks and moral hazard: Theory and experimental evidence (2011) Downloads
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