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Task assignment under agent loss aversion

  • Daido, Kohei
  • Morita, Kimiyuki
  • Murooka, Takeshi
  • Ogawa, Hiromasa

We analyze a task-assignment model in which a principal assigns a task to one of two agents depending on future states. If the agents have concave utility, the principal assigns the task to them contingent on the state. We show that if the agents are loss averse, a state-independent assignment–assigning the task to a single agent in all states–can be optimal even when the principal can write a contingent contract at no cost.

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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 121 (2013)
Issue (Month): 1 ()
Pages: 35-38

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Handle: RePEc:eee:ecolet:v:121:y:2013:i:1:p:35-38
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  12. Kohei Daido & Kimiyuki Morita & Takeshi Murooka & Hiromasa Ogawa, 2013. "Task Assignment under Agent Loss Aversion," Discussion Paper Series 103, School of Economics, Kwansei Gakuin University, revised Mar 2013.
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