Optimal Job Design in the Presence of Implicit Contracts

Arijit Mukherjee, Luís Vasconcelos

Research output: Contribution to journalArticlepeer-review

18 Citations (Scopus)


We characterize the optimal job design in a multitasking environment when the firms use implicit contracts (i.e., bonus payments). Two natural forms of job design are compared: (i) individual assignment, where each agent is assigned to a particular job and (ii) team assignment, where a group of agents share responsibility for a job and are jointly accountable for its outcome. Team assignment mitigates the multitasking problem but may weaken the implicit contracts. The optimal job design follows a cutoff rule where only the firms with high reputation concerns opt for team assignment. However, the cutoff rule need not hold if the firm can combine implicit incentives with explicit pay-per-performance contracts.
Original languageEnglish
Pages (from-to)44-69
JournalRand Journal Of Economics
Issue number1
Publication statusPublished - 1 Jan 2011


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