Another Look at Job Design with Conflicting Tasks

Abstract

This paper provides another look at job design with conflicting tasks. In a two-stage moral hazard framework with risk-neutral agents and limited liability, we study externalities that the first-stage outcome has on the second-stage success probability. We focus on outcome externalities with regard to the fixed (i.e. effort independent) part of the second-stage success probability. Our results differ from the case studied by Schmitz (2013a), who considers outcome externalities with regard to the marginal second-stage success probability.JEL codes: D86, J33, L23, M54.

Salience Bias and Overwork

“…In particular, the more biased A's perception is, the lower the cost-minimizing specification of transfer t H . 14 The principal's expected utility under the cost-minimizing contract to implement e = 1 is…”

“…The moral hazard model with hidden action, where both the principal and the wealth-constrained agent have linear utility functions for money, was applied to address questions of organization design [5,6], sales force compensation [7][8][9], job design [10][11][12][13][14], team compensation [15], delegation [16,17], lawyer compensation [18], human capital accumulation [8], and privacy protection at the workplace [19]. Experimental evidence for the predictions of the moral hazard model are provided by Hoppe and Kusterer [11], Nieken and Schmitz [20], and Hoppe and Schmitz [21].…”

“…With p 2 = p and p 1 = p 3 = 1−p 2 , we have ∆ FB = ψ p . Given the specification of ∆( t) identified in (14), we have to distinguish whether 0 ≤ t, t ST L ≤ t < 0, or t < t ST L . We consider each of these cases in turn.…”

An investigation of seeming favoritism in public procurement

“…Inspired by the works of Schmitz (2013a) on public procurement and the works of Kwon (2006) on favoritism, this paper builds a principal‐agent model with moral hazard to explain seeming favoritism in public procurement. There are many studies focusing on moral hazard problems with a risk‐neutral and wealth‐constrained agent (see e.g., Crémer, 1995; Hoppe & Kusterer, 2011; Hoppe & Schmitz, 2010, 2013, in press; Innes, 1990; Laffont & Martimort, 2002; Ohlendorf & Schmitz, 2012; Pi, 2014, 2018; Schmitz, 2005, 2013a, 2013b), but they neglect to focus their attention on favoritism in public procurement. During the course of building the theoretical models, we use public procurement in the sense of Schmitz and his coauthors (e.g., Hoppe & Schmitz, in press; Schmitz, 2013a), which means that the government delegates the task to a firm in case of a single task or that the government delegates the tasks to different firms in case of multiple tasks.…”