On the Notion of Responsibility in Organizations

A theory of responsibility is provided in a simple model where agents care for their career prospects. First, two agents with uncertain abilities work on a task. Second, a principal decides to promote one of them. Three types of equilibria occur. One in which no agent is responsible for the task and no effort is contributed and two sole responsibility equilibria where exactly one agent contributes effort. The less able agent works harder when he is responsible but produces less output. If incentives matter strongly, the agent whose ability is more precisely known should be responsible, but the opposite is true if selection is important.