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Job design with conflicting tasks reconsidered

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  • Schmitz, Patrick W.

Abstract

A principal wants two sequential tasks to be performed by wealth-constrained agents. When the tasks are conflicting (i.e., when a first-stage success makes second-stage effort less effective), the principal's profit-maximizing way to induce high efforts is to hire one agent to perform both tasks. In this case, the prospect to get a larger second-stage rent after a first-stage success motivates the agent to work hard in the first stage. In contrast, when the tasks are synergistic, the principal prefers to hire two different agents for the two tasks. These results are in contrast to previous studies that consider simultaneous tasks.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 36914.

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Date of creation: Feb 2012
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Handle: RePEc:pra:mprapa:36914

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Keywords: moral hazard; limited liability; conflicting tasks; synergies;

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Cited by:
  1. Kräkel, Matthias, 2013. "Authority and Incentives in Organizations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 412, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Matthias Kräkel & Anja Schöttner, 2014. "Optimal Sales Force Compensation," Working Paper Series of the Department of Economics, University of Konstanz 2014-09, Department of Economics, University of Konstanz.
  3. Kräkel, Matthias & Müller, Daniel, 2013. "Merger Efficiency and Managerial Incentives," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 410, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Kräkel, Matthias & Müller, Daniel, 2013. "Bad Mergers Revisited: An Incentive Perspective," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79914, Verein für Socialpolitik / German Economic Association.

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