Economic Theory

, Volume 37, Issue 2, pp 307–320

Task scheduling and moral hazard

Research Article

DOI: 10.1007/s00199-007-0305-9

Cite this article as:
Mylovanov, T. & Schmitz, P.W. Econ Theory (2008) 37: 307. doi:10.1007/s00199-007-0305-9

Abstract

We study a two-period moral hazard problem with risk-neutral and wealth-constrained agents and three identical tasks. We show that the allocation of tasks over time is important if there is a capacity constraint on the number of tasks that can be performed in one period. We characterize the optimal schedule of tasks over time and the optimal assignment of tasks to agents conditional on the outcomes of previous tasks. In particular, we show that delaying tasks is optimal if and only if the effect of an agent’s effort on the probability of success is relatively low.

Keywords

Job design Task assignment Limited liability Hidden actions 

JEL Classification

D86 L23 M54 

Copyright information

© Springer-Verlag 2007

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of BonnBonnGermany
  2. 2.Kyiv School of EconomicsKyivUkraine
  3. 3.Department of EconomicsUniversity of CologneKölnGermany
  4. 4.CEPRLondonUK

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