Job design with sequential tasks and outcome externalities revisited

Another Look at Job Design with Conflicting Tasks

“…Here, it should be noted that Pi () finds that the results in the case of outcome externalities with regard to the marginal cost are analogous to Schmitz's () Proposition .…”

“…Schmitz () seminally considers sequential tasks with outcome externalities and effort externalities regarding the success probability. Pi () extends Schmitz () by taking outcome externalities with regard to the exertion cost into account.…”

“…This paper tries to further extend Schmitz () from a different perspective. The success probability includes both the fixed term and the variable term, just as the exertion cost also includes both the fixed term and the variable term (see Pi, ). When the fixed term in the success probability (or the exertion cost) of the second task is affected by the first task, there exists an externality regarding the fixed success probability (or the fixed cost).…”

“…The subdivisions of categories are largely overlooked by the existing literature. As for outcome externalities, Schmitz () identifies those in terms of the marginal success probability, and Pi () identifies those regarding the fixed cost and the marginal cost, but they neglect to identify those in terms of the fixed success probability. By analysing outcome externalities that so far have been overlooked in the existing literature, our results contribute to a more comprehensive picture of conflicting tasks in sequential hidden action models.…”

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.…”