Too Few Cooks Spoil the Broth : Division of Labor and Directed Production
Schnedler, Wendelin; Ratto, Marisa (2008), Too Few Cooks Spoil the Broth : Division of Labor and Directed Production, The B.E. Journal of Economic Analysis & Policy, 8, 1, p. 19. http://dx.doi.org/10.2202/1935-1682.1913
TypeArticle accepté pour publication ou publié
Journal nameThe B.E. Journal of Economic Analysis & Policy
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Abstract (EN)How can a manager inﬂuence workers’ activity, while knowing little about it ? This paper examines a situation where production requires several tasks, and the manager wants to direct production to achieve a preferred allocation of effort across tasks. However, the effort that is required for each task cannot be observed, and the production result is the only indicator of worker activity. This paper illustrates that in this situation, the manager cannot implement the preferred allocation with a single worker. On the other hand, the manager is able to implement the preferred allocation by inducing a game among several workers. Gains to workers from collusion may be eliminated by an ability-dependent, but potentially inefﬁcient, task assignment. These ﬁndings provide a new explanation for the division of labor, and bureaucratic features such as “over”- specialization and “wrong” task allocation.
Subjects / KeywordsSpecialization; job design; moral hazard; multitasking
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