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Optimal Task Design: To Integrate or Separate Planning and Implementation?

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Author Info

  • Fahad Khalil
  • Doyoung Kim
  • Dongsoo Shin

Abstract

"Integrating planning and implementation, by having one agent perform both tasks, may be effective in encouraging planning activity whose outcome is not observable. Emphasizing its information-generating role, we find that planning activity is best encouraged by partially integrating the tasks. This is because the value of information is nonmonotonic in the degree of task integration. Therefore, the threat of using a second agent to implement the project may relax the moral hazard constraint associated with the planning task. The project size is distorted to increase the value of information, and there can be overinvestment relative to the first best." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

Volume (Year): 15 (2006)
Issue (Month): 2 (06)
Pages: 457-478

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Handle: RePEc:bla:jemstr:v:15:y:2006:i:2:p:457-478

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Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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Cited by:
  1. Iossa, Elisabetta & Martimort, David, 2011. "Risk Allocation and the Costs and Benefits of Public-Private Partnerships," CEPREMAP Working Papers (Docweb) 1104, CEPREMAP.
  2. Chongwoo Choe & Shingo Ishiguro, 2009. "On The (Sub) Optimality Of Multi-Tier Hierarchies: Coordination Versus Motivation," Development Research Unit Working Paper Series 18/08, Monash University, Department of Economics.
  3. Laux, Volker, 2008. "On the value of influence activities for capital budgeting," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 625-635, March.
  4. Kräkel, Matthias & Müller, Daniel, 2013. "Merger Efficiency and Managerial Incentives," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 410, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  5. Eva I. Hoppe & David J. Kusterer, 2010. "Conflicting Tasks and Moral Hazard: Theory and Experimental Evidence," Cologne Graduate School Working Paper Series 01-04, Cologne Graduate School in Management, Economics and Social Sciences.
  6. Gromb, Denis & Martimort, David, 2004. "The Organization of Delegated Expertise," IDEI Working Papers 284, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. Kräkel, Matthias & Müller, Daniel, 2013. "Bad Mergers Revisited: An Incentive Perspective," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79914, Verein für Socialpolitik / German Economic Association.
  8. Hoppe, Eva I & Schmitz, Patrick W, 2010. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," CEPR Discussion Papers 7681, C.E.P.R. Discussion Papers.
  9. Iossa, Elisabetta & Martimort, David, 2013. "Hidden Action or Hidden Information? How Information Gathering Shapes Contract Design," CEPR Discussion Papers 9552, C.E.P.R. Discussion Papers.
  10. Schmitz, Patrick W., 2013. "Job design with conflicting tasks reconsidered," European Economic Review, Elsevier, vol. 57(C), pages 108-117.
  11. Gromb, Denis & Martimort, David, 2007. "Collusion and the organization of delegated expertise," Journal of Economic Theory, Elsevier, vol. 137(1), pages 271-299, November.
  12. Peter-J. Jost & Frauke Lammers, 2010. "Organization of Project Evaluation and Implementation under Moral Hazard," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(2), pages 212-238, June.
  13. Kim, Doyoung, 2013. "Delegation of information verification," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 488-500.
  14. Shin, Dongsoo, 2008. "Information acquisition and optimal project management," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 1032-1043, July.
  15. Raffaele Fiocco, 2012. "Competition and regulation with product differentiation," Journal of Regulatory Economics, Springer, vol. 42(3), pages 287-307, December.
  16. Schmitz, Patrick W, 2010. "Should a principal hire one agent or two agents to perform two sequential tasks?," CEPR Discussion Papers 7976, C.E.P.R. Discussion Papers.

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