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Multitask assignments with adverse selection

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  • Xu, Minbo
  • Yin, Nina
  • Li, Sanxi

Abstract

In a simple multitask assignments model with adverse selection, we derive the optimal contracts when the principal assigns two tasks to different agents or to a single agent. Assigning tasks to different agents introduces a cross-checking device, while assigning tasks to a single agent relaxes participation constraints. The principal prefers to combine tasks to a single agent except for the case in which the correlation of types is positive and strong enough.

Suggested Citation

  • Xu, Minbo & Yin, Nina & Li, Sanxi, 2019. "Multitask assignments with adverse selection," Economics Letters, Elsevier, vol. 181(C), pages 127-132.
    • Handle: RePEc:eee:ecolet:v:181:y:2019:i:c:p:127-132
    DOI: 10.1016/j.econlet.2019.05.014
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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.
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    4. Laffont, Jean-Jacques & Tirole, Jean, 1987. "Auctioning Incentive Contracts," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 921-937, October.
    5. Benjamin E. Hermalin, 1994. "Heterogeneity in Organizational Form: Why Otherwise Identical Firms Choose Different Incentives for Their Managers," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 518-537, Winter.
    6. Balmaceda, Felipe, 2016. "Optimal task assignments," Games and Economic Behavior, Elsevier, vol. 98(C), pages 1-18.
    7. Chen, Yongmin & Li, Jianpei, 2018. "Bundled procurement," Journal of Public Economics, Elsevier, vol. 159(C), pages 116-127.
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    Cited by:

    1. Chih-Hsiung Chang, 2022. "Information Asymmetry and Card Debt Crisis in Taiwan," Bulletin of Applied Economics, Risk Market Journals, vol. 9(2), pages 123-145.

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