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Should a principal hire one agent or two agents to perform two sequential tasks?

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2010

A principal should hire one agent to perform two sequential tasks when the tasks are conflicting (i.e., a first-stage success makes second-stage effort less effective), while she should hire two different agents when the tasks are synergistic.

Persistent link: https://www.econbiz.de/10008611012

Task Scheduling and Moral Hazard

Mylovanov, Tymofiy; Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2007

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...

Persistent link: https://www.econbiz.de/10005067477

Contracting With Synergies

Edmans, Alex; Goldstein, Itay; Zhu, John - C.E.P.R. Discussion Papers - 2013

This paper studies multi-agent optimal contracting with cost synergies. We model synergies as the extent to which … effort by one agent reduces his colleague's marginal cost of effort. An agent's pay and effort depend on the synergies he … exerts, the synergies his colleagues exert on him and, surprisingly, the synergies his colleagues exert on each other. It may …

Persistent link: https://www.econbiz.de/10011083428

Contracting With Synergies

Edmans, Alex; Goldstein, Itay; Zhu, John - C.E.P.R. Discussion Papers - 2013

Persistent link: https://www.econbiz.de/10011083625

Public Procurement in Times of Crisis: The Bundling Decision Reconsidered

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2013

The government wants two tasks to be performed. In each task, unobservable effort can be exerted by a wealth-constrained private contractor. If the government faces no binding budget constraints, it is optimal to bundle the tasks. The contractor in charge of both tasks then gets a bonus payment...

Persistent link: https://www.econbiz.de/10011084088

Delegation and Incentives

Bester, Helmut; Krähmer, Daniel - C.E.P.R. Discussion Papers - 2007

This paper analyses the relation between authority and incentives. It extends the standard principal--agent model by a project selection stage in which the principal can either delegate the choice of project to the agent or keep the authority. The agent's subsequent choice of effort depends both...

Persistent link: https://www.econbiz.de/10005661941

Optimal Incentive Contracts under Moral Hazard When the Agent is Free to Leave

Englmaier, Florian; Muehlheusser, Gerd; Roider, Andreas - C.E.P.R. Discussion Papers - 2010

We characterize optimal incentive contracts in a moral hazard framework extended in two directions. First, after effort provision, the agent is free to leave and pursue some ex-post outside option. Second, the value of this outside option is increasing in effort, and hence endogenous. Optimal...

Persistent link: https://www.econbiz.de/10008554231

Allocating Control in Agency Problems with Limited Liability and Sequential Hidden Actions

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2005

This paper discusses the optimal organization of sequential agency problems with contractible control actions under limited liability. In each of two stages, a risk-neutral agent can choose an unobservable effort level. A success in the first stage makes effort in the second stage more...

Persistent link: https://www.econbiz.de/10005791951

The hold-up problem, innovations, and limited liability

Schmitz, Patrick W - C.E.P.R. Discussion Papers - 2012

An inventor can invest research effort to come up with an innovation. Once an innovation is made, a contract is negotiated and unobservable effort must be exerted to develop a product. In the absence of liability constraints, the inventor's investment incentives are increasing in his bargaining...

Persistent link: https://www.econbiz.de/10011084016

The Informativeness Principle Under Limited Liability

Chaigneau, Pierre; Edmans, Alex; Gottlieb, Daniel - C.E.P.R. Discussion Papers - 2014

This paper shows that the informativeness principle does not automatically extend to settings with limited liability. Even if a signal is informative about effort, it may have no value for contracting. An agent with limited liability is paid zero for certain output realizations. Thus, even if...

Persistent link: https://www.econbiz.de/10011083536