Conflicting Tasks and Moral Hazard: Theory and Experimental Evidence

Abstract

In real-world agency problems, it is often the case that principals have to delegate not just one but several tasks. In this chapter we focus on situations in which two different tasks to be delegated may be in direct conflict with each other; i.e., providing effort in one task may have a negative side effect on the success probability of the other task. In such situations, job design becomes a major issue.