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)

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.