Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/127286
Authors: 
Ratto, Marisa
Schnedler, Wendelin
Year of Publication: 
2008
Series/Report no.: 
Discussion Paper Series, University of Heidelberg, Department of Economics 468
Abstract: 
How can a manager influence workers' activity while knowing little about it? This paper examines a situation where production requires several tasks, and the manager wants to direct production to achieve a preferred allocation of effort across tasks. However, the effort that is required for each task cannot be observed, and the production result is the only indicator of worker activity. This paper illustrates that in this situation, the manager cannot implement the preferred allocation with a single worker. On the other hand, the manager is able to implement the preferred allocation by inducing a game among several workers. Gains to workers from collusion may be eliminated by an ability-dependent, but potentially inefficient, task assignment. These findings provide a new explanation for the division of labor, and bureaucratic features such as "over"-specialization and "wrong" task allocation.
Subjects: 
specialization
job design
moral hazard
multitasking
JEL: 
D02
D86
M54
D23
L23
J23
Document Type: 
Working Paper

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