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Job design with conflicting tasks reconsidered

  • Schmitz, Patrick W.

A principal wants two sequential tasks to be performed by wealth-constrained agents. Suppose that there is an outcome externality; i.e., a first-stage success can make second-stage effort more or less effective. If the tasks are conflicting, the principal's profit-maximizing way to induce high efforts is to hire one agent to perform both tasks (so that 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 there is an effort externality (i.e., first-stage effort reduces or increases the probability of a second-stage success), then the principal prefers to hire two agents whenever the tasks are conflicting.

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Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 57 (2013)
Issue (Month): C ()
Pages: 108-117

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Handle: RePEc:eee:eecrev:v:57:y:2013:i:c:p:108-117
Contact details of provider: Web page: http://www.elsevier.com/locate/eer

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