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Optimal Task Design: to integrate or separate planning and implementation?

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  • Fahad Khalil
  • Doyoung Kim
  • Dongsoo Shin

Abstract

"Integrating planning and implementation, by having one agent perform both tasks, may be effective in encouraging planning activity whose outcome is not observable. Emphasizing its information-generating role, we find that planning activity is best encouraged by partially integrating the tasks. This is because the value of information is nonmonotonic in the degree of task integration. Therefore, the threat of using a second agent to implement the project may relax the moral hazard constraint associated with the planning task. The project size is distorted to increase the value of information, and there can be overinvestment relative to the first best." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

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Bibliographic Info

Paper provided by University of Washington, Department of Economics in its series Working Papers with number UWEC-2003-01-P.

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Date of creation: Mar 2006
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Publication status: Published in Journal of Economics and Management Strategy, Volume 14/2, 269-291, 2006
Handle: RePEc:udb:wpaper:uwec-2003-01-p

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Cited by:
  1. Choe, Chongwoo & Ishiguro, Shingo, 2008. "On the (Sub)optimality of Multi-tier Hierarchies: Coordination versus Motivation," MPRA Paper 13451, University Library of Munich, Germany.
  2. Laux, Volker, 2008. "On the value of influence activities for capital budgeting," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 625-635, March.
  3. Peter-J. Jost & Frauke Lammers, 2010. "Organization of Project Evaluation and Implementation under Moral Hazard," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(2), pages 212-238, June.
  4. Schmitz, Patrick W, 2010. "Should a principal hire one agent or two agents to perform two sequential tasks?," CEPR Discussion Papers 7976, C.E.P.R. Discussion Papers.
  5. Shin, Dongsoo, 2008. "Information acquisition and optimal project management," International Journal of Industrial Organization, Elsevier, vol. 26(4), pages 1032-1043, July.
  6. Schmitz, Patrick W., 2012. "Job design with conflicting tasks reconsidered," MPRA Paper 36914, University Library of Munich, Germany.
  7. Eva I. Hoppe & Patrick W. Schmitz, 2013. "Public-private partnerships versus traditional procurement: Innovation incentives and information gathering," RAND Journal of Economics, RAND Corporation, vol. 44(1), pages 56-74, 03.
  8. Iossa, Elisabetta & Martimort, David, 2011. "Risk Allocation and the Costs and Benefits of Public-Private Partnerships," CEPREMAP Working Papers (Docweb) 1104, CEPREMAP.
  9. Iossa, Elisabetta & Martimort, David, 2013. "Hidden Action or Hidden Information? How Information Gathering Shapes Contract Design," CEPR Discussion Papers 9552, C.E.P.R. Discussion Papers.
  10. Gromb, Denis & Martimort, David, 2004. "The Organization of Delegated Expertise," IDEI Working Papers 284, Institut d'Économie Industrielle (IDEI), Toulouse.
  11. Kim, Doyoung, 2013. "Delegation of information verification," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 488-500.
  12. Hoppe, Eva I. & Kusterer, David J., 2011. "Conflicting tasks and moral hazard: Theory and experimental evidence," European Economic Review, Elsevier, vol. 55(8), pages 1094-1108.
  13. 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.
  14. Raffaele Fiocco, 2012. "Competition and regulation with product differentiation," Journal of Regulatory Economics, Springer, vol. 42(3), pages 287-307, December.
  15. Gromb, Denis & Martimort, David, 2007. "Collusion and the organization of delegated expertise," Journal of Economic Theory, Elsevier, vol. 137(1), pages 271-299, November.
  16. 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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