Too Few Cooks Spoil The Broth
AbstractWe consider a principal-agent relationship in which two tasks need to be carried out. Each task involves a decision. The principal can neither contract on the two decisions nor on the benefit which she receives from them but only on a signal, which simultaneously reflects both. We show that the efficient choice cannot be achieved if the principal employs a single agent. If, however, the principal employs a second agent, she can set a payment scheme such that the efficient choice can be implemented. We also examine when this implementation is vulnerable to collusion.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2004 with number 154.
Date of creation: 17 Sep 2004
Date of revision:
Contact details of provider:
Postal: Office of the Secretary-General, School of Economics and Finance, University of St. Andrews, St. Andrews, Fife, KY16 9AL, UK
Phone: +44 1334 462479
Web page: http://www.res.org.uk/society/annualconf.asp
More information through EDIRC
Other versions of this item:
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-23 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olsen, Trond E & Torsvik, Gaute, 1998.
"Collusion and Renegotiation in Hierarchies: A Case of Beneficial Corruption,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 413-38, May.
- Olsen, T.E. & Torsvik, G., 1998. "Collusion and Renegotiation in Hierarchies: A Case of Beneficial Corruption," Norway; Department of Economics, University of Bergen 179, Department of Economics, University of Bergen.
- Strausz, Roland, 1997.
"Delegation of Monitoring in a Principal-Agent Relationship,"
Review of Economic Studies,
Wiley Blackwell, vol. 64(3), pages 337-57, July.
- Strausz, R., 1995. "Delegation of Monitoring in a Principal-Agent Relationship," Discussion Paper 1995-60, Tilburg University, Center for Economic Research.
- Kofman, Fred & Lawarree, Jacques, 1993. "Collusion in Hierarchical Agency," Econometrica, Econometric Society, vol. 61(3), pages 629-56, May.
- Susan Athey & John Roberts, 2001. "Organizational Design: Decision Rights and Incentive Contracts," American Economic Review, American Economic Association, vol. 91(2), pages 200-205, May.
- Grout, Paul & Schnedler, Wendelin, 2008.
"Non-Profit Organizations in a Bureaucratic Environment,"
IZA Discussion Papers
3685, Institute for the Study of Labor (IZA).
- Grout, Paul & Schnedler, Wendelin, 2008. "Non-Profit Organizations in a Bureaucratic Environment," Sonderforschungsbereich 504 Publications 08-17, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
- Paul Grout & Wendelin Schnedler, 2008. "Non-Profit Organizations in a Bureaucratic Environment," Working Papers 0474, University of Heidelberg, Department of Economics, revised Sep 2008.
- Paul A. Grout & Wendelin Schnedler, 2008. "Non-Profit Organizations in a Bureaucratic Environment," The Centre for Market and Public Organisation 08/202, Department of Economics, University of Bristol, UK.
- Kragl, Jenny & Schöttner, Anja, 2011. "Wage Floors and Optimal Job Design," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48731, Verein für Socialpolitik / German Economic Association.
- Jenny Kragl & Anja Schöttner, 2012. "Wage Floors, Imperfect Performance Measures, and Optimal Job Design," Working Paper Series of the Department of Economics, University of Konstanz 2012-36, Department of Economics, University of Konstanz.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.