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Task Scheduling and Moral Hazard

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Author Info
Mylovanov, Tymofiy
Schmitz, Patrick W.

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

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Find related papers by JEL classification:
D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management

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  1. Ohlendorf, Susanne & Schmitz, Patrick W., 2008. "Repeated Moral Hazard, Limited Liability, and Renegotiation," CEPR Discussion Papers 6725, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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