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DP7976 | Should a principal hire one agent or two agents to perform two sequential tasks?
Author(s)
Patrick W. Schmitz
Publication Date
01/09/2010
JEL Code(s)
D86
Keyword(s)
Conflicting tasks, moral hazard, synergies
Programme Area(s)
Industrial Organization
Network(s)
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Abstract
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.