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Task Scheduling and Moral Hazard

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  • Mylovanov, Tymofiy
  • Schmitz, Patrick W.

Abstract

We study a two-period moral hazard problem with risk-neutral and wealth-constrained agents and three identical tasks. We show that the allocation of tasks over time is important if there is a capacity constraint on the number of tasks that can be performed in one period. We characterize the optimal schedule of tasks over time and the optimal assignment of tasks to agents conditional on the outcomes of previous tasks. In particular, we show that delaying tasks is optimal if and only if the effect of an agent's effort on the probability of success is relatively low.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6467.

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Date of creation: Sep 2007
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Handle: RePEc:cpr:ceprdp:6467

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Keywords: hidden actions; Job design; limited liability; task assignment;

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References

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Citations

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Cited by:
  1. Ohlendorf, Susanne & Schmitz, Patrick W., 2011. "Repeated moral hazard and contracts with memory: The case of risk-neutrality," MPRA Paper 28823, University Library of Munich, Germany.
  2. Ohlendorf, Susanne & Schmitz, Patrick W., 2008. "Repeated Moral Hazard, Limited Liability, and Renegotiation," CEPR Discussion Papers 6725, C.E.P.R. Discussion Papers.
  3. Makarov, Uliana, 2011. "Networking or not working: A model of social procrastination from communication," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 574-585.
  4. Guillermo Ordoñez, 2013. "Reputation from nested activities," Economic Theory, Springer, vol. 52(3), pages 915-940, April.
  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.

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