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Relational Contracts and Job Design

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  • Anja Schöttner

Abstract

This paper analyzes the problem of optimal job design when there is only one contractible and imperfect performance measure for all tasks whose contribution to firm value is non-veritable. I find that task splitting is optimal when relational contracts based on firm value are not feasible. By contrast, if an agent who performs a given set of tasks receives an implicit bonus, the principal always benefits from assigning an additional task to this agent.

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File URL: http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2005-052.pdf
File Function: Revised version, 2005
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Bibliographic Info

Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2005-052.

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Length: 35 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:hum:wpaper:sfb649dp2005-052

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Keywords: job design; multi-tasking; relational contracts;

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  1. Klein, Benjamin, 1996. "Why Hold-Ups Occur: The Self-Enforcing Range of Contractual Relationships," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 34(3), pages 444-63, July.
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  15. Valsecchi, Irene, 1996. "Policing Team Production through Job Design," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 12(2), pages 361-75, October.
  16. Pearce, David G. & Stacchetti, Ennio, 1998. "The Interaction of Implicit and Explicit Contracts in Repeated Agency," Games and Economic Behavior, Elsevier, Elsevier, vol. 23(1), pages 75-96, April.
  17. Demougin, Dominique M. & Fabel, Oliver, 2004. "The Determinants of Salary and Bonus for Rank and File Employees," Discussion Papers, Series I 327, University of Konstanz, Department of Economics.
  18. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, American Economic Association, vol. 90(5), pages 1346-1361, December.
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