Working Paper: CEPR ID: DP6467
Authors: Tymofiy Mylovanov; Patrick W. Schmitz
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: Hidden Actions; Job Design; Limited Liability; Task Assignment
JEL Codes: D86; L23; M54
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| allocation of tasks (C78) | agents' effort levels (D29) |
| agents' effort levels (D29) | probability of success (C25) |
| allocation of tasks (C78) | probability of success (C25) |
| scheduling of tasks (C78) | incentives for agents (L85) |
| strategic scheduling of tasks (C78) | agency costs (G34) |
| expected rents (R21) | agency costs (G34) |