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Multiple tasks and political organization

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  • Hamami, Tom

Abstract

Consider an environment such as a political election where a principal requires the completion of multiple tasks, but an agent can only be rewarded with a hire/fire decision rather than an endogenously chosen monetary payment. When the principal hires a single agent to perform multiple tasks, the agent allocates effort between the tasks inefficiently. I demonstrate that, even though hiring multiple agents completely mitigates this effort distortion problem, the principal is still better off hiring a single agent if the (exogenous) rewards for the tasks are sufficiently different. In contrast to similar results in the multi-task literature, this finding is not driven by risk aversion or noise. Rather, it is a direct result of the restricted contract space inherent to the environment.

Suggested Citation

  • Hamami, Tom, 2015. "Multiple tasks and political organization," Economics Letters, Elsevier, vol. 128(C), pages 48-50.
    • Handle: RePEc:eee:ecolet:v:128:y:2015:i:c:p:48-50
    DOI: 10.1016/j.econlet.2015.01.010
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    References listed on IDEAS

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    1. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    2. Laux, Christian, 2001. "Limited-Liability and Incentive Contracting with Multiple Projects," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 514-526, Autumn.
    3. Gersbach, Hans & Liessem, Verena, 2008. "Incentive contracts and elections for politicians with multi-task problems," Journal of Economic Behavior & Organization, Elsevier, vol. 68(2), pages 401-411, November.
    4. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-328, March.
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    Keywords

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    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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