Job design with conflicting tasks reconsidered

Patrick Schmitz

European Economic Review, 2013, vol. 57, issue C, 108-117

Abstract: A principal wants two sequential tasks to be performed by wealth-constrained agents. Suppose that there is an outcome externality; i.e., a first-stage success can make second-stage effort more or less effective. If the tasks are conflicting, the principal's profit-maximizing way to induce high efforts is to hire one agent to perform both tasks (so that the prospect to get a larger second-stage rent after a first-stage success motivates the agent to work hard in the first stage). In contrast, when there is an effort externality (i.e., first-stage effort reduces or increases the probability of a second-stage success), then the principal prefers to hire two agents whenever the tasks are conflicting.

Keywords: Moral hazard; Limited liability; Conflicting tasks; Synergies (search for similar items in EconPapers)
JEL-codes: D86 J33 L23 M54 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:57:y:2013:i:c:p:108-117

DOI: 10.1016/j.euroecorev.2012.11.001

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