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T ask A ssignment and A gency S tructures
Author(s) -
Hirao Yukiko
Publication year - 1993
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.1993.00299.x
Subject(s) - unobservable , profit (economics) , principal–agent problem , agency (philosophy) , principal (computer security) , business , computer science , operations research , microeconomics , economics , engineering , computer security , finance , econometrics , corporate governance , philosophy , epistemology
This paper considers an agency model in which a principal delegates an agent authority to choose investment projects. The performance of the project depends stochastically on the agent's evaluation and operating efforts. The paper examines the conditions under which the principal prefers to assign production to a second agent. It is shown that the tasks will be assigned to two agents of the agent chooses an unobservable operating effort. The tasks will be assigned to one agent if the agent's evaluation and operating efforts are both unobservable and if disutilities of efforts are large relative to the profit from the risky project.