Job Design with Conflicting Tasks Reconsidered

Abstract

Abstract. A principal wants two sequential tasks to be performed by wealthconstrained agents. When the tasks are conflicting (i.e., when a first-stage success makes second-stage effort less effective), the principal's profit-maximizing way to induce high efforts is to hire one agent to perform both tasks. In this case, 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 the tasks are synergistic, the principal prefers to hire two different agents for the two tasks. These results are in contrast to previous studies that consider simultaneous tasks. E-mail address: patrick.schmitz@uni-koeln.de. I would like to thank Eva Hoppe for very helpful discussions.

Job design with sequential tasks and outcome externalities revisited

“…In this paper, we make a distinction between the outcome externality in terms of the marginal cost and that regarding the fixed cost. We consider job design with sequential tasks based on the agent's cost side, and we find that in a certain situation our results are different from those of Schmitz (2013a).…”

“…We adopt a principal-agent moral hazard model with sequential hidden actions and limited liability that is pioneeringly developed by Innes (1990) and widely applied by Schmitz (2005Schmitz ( , 2013a, Chen and Chiu (2013) and others, especially by Schmitz and his colleagues. Our analytical framework follows that of Schmitz (2013a).…”

“…Our analytical framework follows that of Schmitz (2013a). There are two sequential tasks to be performed.…”

“…Ohlendorf and Schmitz (2012) discuss circumstances under which incentives provided in the second stage can act as carrot and stick for the first stage. Schmitz (2013a) takes outcome externalities and effort externalities into account with a special emphasis on conflicting tasks. This paper follows the second line of literature and tries to extend Schmitz (2013a) from a different perspective.…”

“…When the task in the first stage imposes an externality on the task in the second stage, effort on the task in the second stage will be more effective or ineffective. Schmitz (2013a) originally identifies an outcome externality in terms of the success probability on the agent's benefit side. However, he does not investigate the outcome externality on the agent's cost side.…”