Multitasking and Incentive Contracts
Multitasking and Incentive Contracts

Author: Veikko Thiele

Publisher: VDM Publishing

Published: 2007

Total Pages: 132

ISBN-13: 9783836422253

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Employees are generally charged with performing a collection of various tasks that contribute to firm value differently. The accountability for multiple tasks implies that employees can not only decide on their effort intensity, but also on how to allocate their effort across these tasks. To motivate employees, firms often utilize incentive contracts on the basis of objective performance measures. However, if individual performance evaluations do not accurately reflect employees' contributions to firm value, the application of such incongruent performance measures induces employees to place more emphasis on less valuable tasks relative to those with greater contributions to firm value. The author, Veikko Thiele, investigates and explicates the optimal design of incentive contracts in situations where employees are charged with multiple tasks (multitasking). He identifies and explores potential mechanisms aimed at motivating employees to implement more efficient effort allocations from a firm's perspective. This book specifically targets economists, executives, consultants, and companies.

Multi-Stage Incentive Contract Design of Aviation Complex Product Multi-Task Delivery Strategy
Multi-Stage Incentive Contract Design of Aviation Complex Product Multi-Task Delivery Strategy

Author: Yehui Zhang

Publisher:

Published: 2023

Total Pages: 0

ISBN-13:

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The increasing demand for aviation complex products makes complex product manufacturers pay more attention to delivery efficiency, and the efficiency and effect of delivery problems are the key factors that restrict the delivery efficiency. This study aims to design a long-term effective incentive contract, which stimulates the subjective initiative of each technical business department to deal with delivery problems so as to improve delivery efficiency. We consider the behavioral characteristics of each technical business department (fairness preference, interrelationship diversity, technical capability, etc.) to expand the benchmark incentive model. The multi-stage incentive mechanism which combines the explicit incentives and implicit incentives are developed to explore the optimal delivery strategies based on a benchmark model. The results show that the incentive contracts can improve delivery efficiency and benefit delivery centers and technical business departments. The delivery decisions of the department are influenced by the closeness of department relationships and the fairness of assignment, and the departments tend to pay more effort in tasks with high relative importance and low effort cost. When the relative importance of tasks is equal to the ratio of marginal cost, a weak incentive zone in the delivery incentive contract is existed. The incentive effect of reputation effect is obvious except for the last stage. Base on the designed incentive contracts, the subjective initiative of the participants can be effectively stimulated to empower complex product delivery.

Formal and Relational Incentives in a Multitask Model
Formal and Relational Incentives in a Multitask Model

Author: Kohei Daido

Publisher:

Published: 2008

Total Pages: 26

ISBN-13:

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This paper studies the optimal contracts in a multitask model when a principal-agent relationship is long-term. If some outcomes are unverifiable, then the contracts have to satisfy the self-enforcing condition. I characterize the optimal contract in terms of the discount rate, the cost substitutes, and the weight of the unverifiable outcomes relative to the principal's payoff. Then, as the discount rate increases, the incentive to verifiable outcome (formal incentive) changes discontinuously and non-monotonically while the incentive to the unverifiable outcome (relational incentive) changes discontinuously but monotonically.