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Task-Specific Abilities in Multi-Task Agency Relations

Thiele, Veikko (2007): Task-Specific Abilities in Multi-Task Agency Relations.

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Abstract

This paper analyzes a multi-task agency framework where the agent exhibits task-specific abilities. Besides investigating the appendant consequences of applying incongruent performance measures in incentive contracts, this paper demonstrates how the provision of incentives - including the optimal aggregation of information - takes the agent's task-specific abilities into consideration. It further emphasizes the relation between job characteristics and the principal's preference for selecting specific agents. This paper essentially demonstrates that differences in task-specific abilities across agents can provide a supplementary explanation of why they are allocated to various jobs; or why they receive different incentive contracts, even if their jobs are identical.

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