Limited Intertemporal Commitment and Job Design

Trond Olsen and Gaute Torsvik

No 77, CESifo Working Paper Series from CESifo

Abstract: Should workers be given jobs where they have joint responsibility for tasks, or should tasks be separated into different jobs with individual responsibility? Or, if there are more tasks than workers, how should tasks optimally be grouped together? And to what extent should workers be allowed to pursue outside activities while they are at work? Recent work has demonstrated that when the various tasks are substitutes for the worker, static incentive considerations yield the following answers: Separate tasks, and if that is not possible, group together tasks with the same possibility of performance evaluation. Moreover, workers should be given more discretion to pursue outside activities the easier it is to measure their performance on the workplace activity. We show that if a principal who faces an intertemporal commitment problem in her motivation of workers follows these advices, then the negative consequences of the commitment problem are reinforced. More generally, we inquire about optimal job design in an intertemporal agency model, and we find that the answers may be quite different from those obtained on the basis of a static model.

Date: 1994
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Related works:
Journal Article: Limited intertemporal commitment and job design (1996)
Working Paper: Limited Intertemporal Commitment and Job Design (1995)
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