DP7976 Should a principal hire one agent or two agents to perform two sequential tasks?

Author(s): Patrick W. Schmitz
Publication Date: September 2010
Keyword(s): conflicting tasks, moral hazard, synergies
JEL(s): D86
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=7976

A principal should hire one agent to perform two sequential tasks when the tasks are conflicting (i.e., a first-stage success makes second-stage effort less effective), while she should hire two different agents when the tasks are synergistic.