Task Assignment under Agent Loss Aversion

Kohei Daido, Kimiyuki Morita (), Takeshi Murooka and Hiromasa Ogawa ()
Additional contact information
Kimiyuki Morita: Graduate School of Commerce and Management, Hitotsubashi University
Hiromasa Ogawa: Graduate School of Economics, University of Tokyo

No 103, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: We analyze a simple task-assignment model in which a principal assigns a task to one of two agents depending on the state. If the agents have standard concave utility, the principal assigns the task to an agent with the highest productivity in each state. In contrast, if the agents are loss averse, in order to alleviate their expected losses the principal may assign the task to a single agent in all states. Furthermore, the optimal contract may specify the same effort level across states. Our results imply that such simple contracts can be optimal even when employers can write contingent contracts at no cost.

Keywords: task assignment; loss aversion; reference-dependent preferences (search for similar items in EconPapers)
JEL-codes: D03 D86 M12 M52 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2013-03, Revised 2013-03
New Economics Papers: this item is included in nep-cbe, nep-cta, nep-hrm, nep-mic and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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http://192.218.163.163/RePEc/pdf/kgdp103.pdf First version, 2013 (application/pdf)

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Journal Article: Task assignment under agent loss aversion (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:103

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