Optimal Task Design: To Integrate or Separate Planning and Implementation?

"Integrating planning and implementation, by having one agent perform both tasks, may be effective in encouraging planning activity whose outcome is not observable. Emphasizing its information-generating role, we find that planning activity is best encouraged by partially integrating the tasks. This is because the value of information is nonmonotonic in the degree of task integration. Therefore, the threat of using a second agent to implement the project may relax the moral hazard constraint associated with the planning task. The project size is distorted to increase the value of information, and there can be overinvestment relative to the first best." Copyright 2006, The Author(s) Journal Compilation (c) 2006 Blackwell Publishing.

[1]  David Martimort,et al.  The Organization of Delegated Expertise , 2004 .

[2]  Jean Tirole,et al.  Repeated auctions of incentive contracts, investment and bidding parity with an application to takeovers , 1987 .

[3]  David E. M. Sappington,et al.  Information, Incentives, and Organizational Mode , 1987 .

[4]  James J. Anton,et al.  Second Sourcing and the Experience Curve: Price Competition in Defense Procurement , 1987 .

[5]  David P. Baron,et al.  Information, Control, and Organizational Structure , 1992 .

[6]  D. Sappington.  Limited liability contracts between principal and agent , 1983 .

[7]  I. Brocas,et al.  A Theory of Influence , 2002 .

[8]  Jean-Charles Rochet,et al.  Contracts and Productive Information Gathering , 1997 .

[9]  Y. Hirao,et al.  Task Assignmentand Agency Structures , 1993 .

[10]  James D. Dana,et al.  The Organization and Scope of Agents: Regulating Multiproduct Industries , 1993 .

[11]  R. Myerson,et al.  Regulating a Monopolist with Unknown Costs , 1982 .

[12]  Dongsoo Shin.  Information Acquisition and Optimal Project Management , 2008 .

[13]  Tracy R. Lewis,et al.  Ignorance in Agency Problems , 1993 .

[14]  P. Bolton,et al.  A theory of predation based on agency problems in financial contracting , 1990 .

[15]  K. Arrow.  Vertical integration and communication , 1975 .

[16]  Anke S. Kessler.  The Value of Ignorance , 1998 .

[17]  Joel S. Demski,et al.  Managing Supplier Switching , 1987 .

[18]  J. Oxley,et al.  International Franchising: Evidence from Us and Canadian Franchisors in Mexico , 2001 .

[19]  Jean-Charles Rochet,et al.  Strategic Information Gathering Before a Contract is Offered , 1998 .

[20]  Arijit Sen.  Termination Clauses in Long‐Term Contracts , 1996 .

[21]  J. Tirole,et al.  Formal and Real Authority in Organizations , 1997, Journal of Political Economy.

[22]  Tracy R. Lewis,et al.  Information Management in Incentive Problems , 1997, Journal of Political Economy.

[23]  Dongsoo Shin,et al.  Choice of technology in outsourcing: an endogenous information structure , 2004, Inf. Econ. Policy.

[24]  Asher Wolinsky,et al.  Eliciting information from multiple experts , 2002, Games Econ. Behav..

[25]  Richard P. McLean,et al.  Optimal Selling Strategies under Uncertainty for a Discriminating Monopolist When Demands Are Interdependent , 1985 .

[26]  Richard J. Gilbert,et al.  Regulating Complementary Products: A Comparative Institutional Analysis , 1995 .

[27]  Richard A. Lambert.  Executive Effort and Selection of Risky Projects , 1986 .

[28]  V. Laux.  On the Value of Influence Activities for Capital Budgeting , 2005 .

[29]  J. Sobel,et al.  STRATEGIC INFORMATION TRANSMISSION , 1982 .

[30]  Mathias Dewatripont,et al.  Advocates , 1999, Journal of Political Economy.

[31]  Claudio Mezzetti,et al.  Gathering information before signing a contract with a privately informed principal , 2000 .

[32]  David Martimort,et al.  Collusion and the organization of delegated expertise , 2007, J. Econ. Theory.