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Tasks and Types: An Application of Mechanism Design to Self‐Selection in Labour Markets
Author(s) -
Porro Giuseppe
Publication year - 1997
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/1467-9914.00042
Subject(s) - function (biology) , selection (genetic algorithm) , quality (philosophy) , mechanism (biology) , context (archaeology) , microeconomics , computer science , simple (philosophy) , extension (predicate logic) , service (business) , economics , business , marketing , artificial intelligence , paleontology , philosophy , epistemology , evolutionary biology , biology , programming language
The Baron–Myerson (1982) regulatory mechanism is applied to the screening activity of a monopolist, who hires workers differentiated by quality and assigns them to different tasks. The employer charges a price to the workers for the screening service: necessary and sufficient conditions are provided for a self‐selective price function to exist. It is shown that under the optimal price function tasks are assigned in such a way that workers' effort is increasing in workers' quality. It is not necessarily true, however, that the price function must be increasing in workers' quality. A simple two‐types model is provided, showing the same results. Also the extension of the model to a dynamic context and, particularly, the requirements of a credible pre‐commitment available to the screener are discussed.