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Production Externalities, Congruity of Aggregate Signals, and Optimal Task Assignments

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  • JOHN S. HUGHES
  • LI ZHANG
  • JAI†ZHENG JAMES XIE

Abstract

In this paper, we consider the role of production externalities in the task assignment problem. Milgrom and Roberts (1992) suggest that complementarities available when agents are assigned to diverse tasks are necessary to overcome distortions in effort allocations caused by an inability to fine†tune incentives when agents' compensation is based on aggregate imperfect signals. Our analysis formalizes this intuition in a setting that encompasses externalities under both diverse and similar task assignments.

Suggested Citation

  • John S. Hughes & Li Zhang & Jai†Zheng James Xie, 2005. "Production Externalities, Congruity of Aggregate Signals, and Optimal Task Assignments," Contemporary Accounting Research, John Wiley & Sons, vol. 22(2), pages 393-408, June.
    • Handle: RePEc:wly:coacre:v:22:y:2005:i:2:p:393-408
    DOI: 10.1506/Q69Y-HLQF-D134-WGU7
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    Cited by:

    1. Kragl, Jenny & Schöttner, Anja, 2011. "Wage Floors and Optimal Job Design," VfS Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48731, Verein für Socialpolitik / German Economic Association.
    2. Jenny Kragl & Anja Schöttner, 2014. "Wage Floors, Imperfect Performance Measures, And Optimal Job Design," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(2), pages 525-550, May.
    3. Buchen, Clemens & Kragl, Jenny & Palermo, Alberto, 2021. "Specialist vs. Generalist: Efficiency in Multitasking," Economics Letters, Elsevier, vol. 199(C).
    4. Gerald A. Feltham & Christian Hofmann, 2007. "Limited Commitment in Multi†agent Contracting," Contemporary Accounting Research, John Wiley & Sons, vol. 24(2), pages 345-375, June.
    5. Smith, Michael, 2022. "Monetizing virtuous employees," Accounting, Organizations and Society, Elsevier, vol. 98(C).

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