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Optimal Task Design: to integrate or separate planning and implementation?

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  • Fahad Khalil
  • Doyoung Kim
  • Dongsoo Shin

Abstract

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.
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Suggested Citation

  • Fahad Khalil & Doyoung Kim & Dongsoo Shin, 2006. "Optimal Task Design: to integrate or separate planning and implementation?," Working Papers UWEC-2003-01-P, University of Washington, Department of Economics.
    • Handle: RePEc:udb:wpaper:uwec-2003-01-p
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