Specifically, while all effort by agent a on task increases the returns solely of activity A, effort on task has shared benefit. The second issue that becomes relevant to incentive provision is that there is an asymmetry, 5 1 1 D2 e 1 1 2 D2 e, y between the two efforts. American Economic Review American Economic Association Ĭontracting technology is used simply to illustrate contracting distortions, while retaining the inherent symmetry of the problem. So far, there is little conceptually novel about constraints on efficiencyâit offers a specific parameterization of multitasking problems which would offer the obvious implication of lower-powered incentives when d gets larger. For agent b, his output is the mirror image with all his e increasing activity B, and 1 2 x 2 of his e increasing output A. The most natural interpretation of this is that activity involves cost containment, which has benefits across the entire organization as cost savings are shared, such as where a benefit officer disqualifies a candidate for those benefits. Specifically, a fraction x of e benefits the activity in which the agent is engaged, while the remaining 1 2 x 2 benefits the other activity. Intrinsic Motivation and Incentives Intrinsic Motivation and IncentivesĬontracting technology is used simply to illustrate contracting distortions, while retaining the inherent symmetry of the problem.
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