Production Externalities, Congruity of Aggregate Signals, and Optimal Task Assignments
19 Pages Posted: 5 Feb 2005
Abstract
In this paper, we consider the role of production externalities in the task assignment problem. Milgrom and Roberts (1992) suggest that complementarities available when agents are assigned to diverse tasks are necessary to overcome distortions in effort allocations caused by an inability to fine tune incentives when agents' compensation is based on aggregate imperfect signals. Our analysis formalizes this intuition in a setting that encompasses externalities under both diverse and similar task assignments.
Keywords: Task Assignments, Incentives, Complementarities, Repetition, Congruity, Effort Allocations
JEL Classification: D82, J41, M54
Suggested Citation: Suggested Citation
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