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A Theory of Responsibility in Organizations

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  • Prendergast, Canice J
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    Abstract

    This article considers the implications of allowing a manager discretion over task assignment. If employees earn rents from carrying out tasks and the manager cannot 'sell' the jobs to her subordinates, she has an incentive to take on more tasks than is optimal and delegate too few to a subordinate. The author shows that, although firms can alleviate this incentive by offering output-contingent contracts, even with the optimal contract, (1) the manager carries out too many tasks, (2) she exerts too much effort on her own tasks, and (3) her subordinate exerts too little effort on his tasks. Copyright 1995 by University of Chicago Press.

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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 13 (1995)
    Issue (Month): 3 (July)
    Pages: 387-400

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    Handle: RePEc:ucp:jlabec:v:13:y:1995:i:3:p:387-400

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    Web page: http://www.journals.uchicago.edu/JOLE/

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    Cited by:
    1. Herbold, Daniel, 2013. "Effort Incentives and On-the-Job Search: An Alternative Role for Efficiency Wages in Employment Contracts," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79983, Verein für Socialpolitik / German Economic Association.
    2. Björn Bartling & Urs Fischbacher, 2012. "Shifting the Blame: On Delegation and Responsibility," Review of Economic Studies, Oxford University Press, vol. 79(1), pages 67-87.
    3. Thomas Cornelißen & Uwe Jirjahn, 2010. "September 11th and the Earnings of Muslims in Germany: The Moderating Role of Education and Firm Size," SOEPpapers on Multidisciplinary Panel Data Research 278, DIW Berlin, The German Socio-Economic Panel (SOEP).
    4. Brent Boning & Casey Ichniowski & Kathryn Shaw, 2001. "Opportunity Counts: Teams and the Effectiveness of Production Incentives," NBER Working Papers 8306, National Bureau of Economic Research, Inc.
    5. Walter Novaes & Luigi Zingales, 1998. "Bureaucracy as a Mechanism to Generate Information," CRSP working papers 477, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    6. Rafael Hortala-Vallve & Miguel Sanchez, 2005. "Hierarchic contracting," STICERD - Distributional Analysis Research Programme Papers 73, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. Oxoby, Robert J., 2002. "Status characteristics, cognitive bias, and incentives in teams," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 31(3), pages 301-316.
    8. Sliwka, Dirk, 2004. "On the Notion of Responsibility in Organizations," IZA Discussion Papers 1423, Institute for the Study of Labor (IZA).
    9. Eric Van den Steen, 2010. "Interpersonal Authority in a Theory of the Firm," American Economic Review, American Economic Association, vol. 100(1), pages 466-90, March.
    10. Marino, Anthony M., 2006. "Delegation versus an approval process and the demand for talent," International Journal of Industrial Organization, Elsevier, vol. 24(3), pages 487-503, May.
    11. Miguel A. Sanchez & Rafael Hortala-Vallve, 2005. "Hierarchic contracting," LSE Research Online Documents on Economics 6548, London School of Economics and Political Science, LSE Library.

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