Optimal Job Design and Information Elicitation
2022-04-13 22:38:00
Managers often rely on their subordinates for local information that aids decision-making but cannot commit to a decision rule. When the Firm and the workers have conflicting interests on how such information gets used, incentives for effort and information elicitation become intertwined. We explore how this incentive problem may be solved through job design---the choice between “individual assignment” where all tasks in a given job are assigned to the same worker, and “team assignment” where the tasks are split among a group. Team assignment facilitates information elicitation but suffers from “diseconomies of scope” in incentive provision. This tradeoff drives the optimal job design, and it is shaped by two key parameters---the workers’ ex-ante likelihood of being informed and the noise in the performance measure that is used to reward the worker. Individual assignment is optimal when the performance measure is well-aligned, but team is optimal when the measure is noisy and the workers are highly likely to be informed about the local conditions.