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Conflicting Tasks and Moral Hazard: Theory and Experimental Evidence

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  • Eva I. Hoppe

    (Department of Economics, University of Cologne)

  • David J. Kusterer

    (Department of Economics, University of Cologne)

Abstract

We study a multi-task principal-agent problem in which tasks can be in direct conflict with each other. In theory, it is difficult to induce a single agent to exert efforts in two conflicting tasks, because effort in one task decreases the success probability of the other task. We have conducted an experiment in which we find strong support for the relevance of this incentive problem. In the presence of conflict, subjects choose two efforts significantly less often when both tasks are assigned to a single agent than when there are two agents each in charge of one task.

Suggested Citation

  • 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.
    • Handle: RePEc:cgr:cgsser:01-04
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    Cited by:

    1. Hoppe, Eva I. & Kusterer, David J., 2011. "Behavioral biases and cognitive reflection," Economics Letters, Elsevier, vol. 110(2), pages 97-100, February.
    2. Charlene M. Kalenkoski & Gigi Foster, 2015. "Measuring the relative productivity of multitasking to sole-tasking in household production: experimental evidence," Applied Economics, Taylor & Francis Journals, vol. 47(18), pages 1847-1862, April.
    3. Jiancai Pi, 2021. "An investigation of seeming favoritism in public procurement," Manchester School, University of Manchester, vol. 89(1), pages 128-137, January.
    4. Jiancai Pi, 2018. "Another Look at Job Design with Conflicting Tasks," Australian Economic Papers, Wiley Blackwell, vol. 57(4), pages 427-434, December.
    5. Mol, Jantsje M. & Botzen, W. J. Wouter & Blasch, Julia E., 2020. "Risk reduction in compulsory disaster insurance: Experimental evidence on moral hazard and financial incentives," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 84(C).
    6. Fabio Römeis & Fabian Herweg & Daniel Müller, 2022. "Salience Bias and Overwork," Games, MDPI, vol. 13(1), pages 1-22, January.
    7. Zahra Murad & Charitini Stavropoulou & Graham Cookson, 2019. "Incentives and gender in a multi-task setting: An experimental study with real-effort tasks," PLOS ONE, Public Library of Science, vol. 14(3), pages 1-18, March.
    8. Schmitz, Patrick W., 2013. "Job design with conflicting tasks reconsidered," European Economic Review, Elsevier, vol. 57(C), pages 108-117.
    9. Pi, Jiancai, 2014. "Job design with sequential tasks and outcome externalities revisited," Economics Letters, Elsevier, vol. 125(2), pages 274-277.
    10. Schmitz, Patrick W., 2013. "Public procurement in times of crisis: The bundling decision reconsidered," Economics Letters, Elsevier, vol. 121(3), pages 533-536.
    11. Dahai Li & Huan Wang & Yang Li, 2023. "Incentive Mechanisms for Thermal Power Generation Enterprises with Conflicting Tasks: Electricity Production versus Carbon Emission Reduction," Sustainability, MDPI, vol. 15(13), pages 1-22, July.

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    More about this item

    Keywords

    moral hazard; conflicting tasks; experiment;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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