Job design, delegation and cooperation: A principal-agent analysis

This paper analyzes how tasks are assigned in organizations. Tasks can be allocated vertically between a principal and an agent, or laterally among agents. The resulting organizational job design determines how many tasks are delegated to agents, and how the agents' tasks are divided among them. In the framework of the standard principal-agent relationship with moral hazard, it is shown that (i) an incentive consideration causes the principal to group a broad range of tasks into an agent's job rather than hire multiple agents and make each of them specialize in just one task; and (ii) the principal may choose to delegate all the tasks in order to mitigate a conflicting incentive problem with agents.