Job Design with Conflicting Tasks Reconsidered

27 Pages Posted: 2 Nov 2012

See all articles by Patrick W. Schmitz

Patrick W. Schmitz

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

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2012

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

JEL Classification: D86, L23, J33, M54

Suggested Citation

Schmitz, Patrick W., Job Design with Conflicting Tasks Reconsidered (October 1, 2012). Available at SSRN: https://ssrn.com/abstract=2169549 or http://dx.doi.org/10.2139/ssrn.2169549

Patrick W. Schmitz (Contact Author)

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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