Task Scheduling and Moral Hazard

20 Pages Posted: 30 May 2008

See all articles by Tymofiy Mylovanov

Tymofiy Mylovanov

University of Bonn

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Date Written: September 2007

Abstract

We study a two-period moral hazard problem with risk-neutral and wealth-constrained agents and three identical tasks. We show that the allocation of tasks over time is important if there is a capacity constraint on the number of tasks that can be performed in one period. We characterize the optimal schedule of tasks over time and the optimal assignment of tasks to agents conditional on the outcomes of previous tasks. In particular, we show that delaying tasks is optimal if and only if the effect of an agent's effort on the probability of success is relatively low.

Keywords: hidden actions, Job design, limited liability, task assignment

JEL Classification: D86, L23, M54

Suggested Citation

Mylovanov, Tymofiy and Schmitz, Patrick W., Task Scheduling and Moral Hazard (September 2007). CEPR Discussion Paper No. DP6467. Available at SSRN: https://ssrn.com/abstract=1138580

Tymofiy Mylovanov (Contact Author)

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Patrick W. Schmitz

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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