Optimal Job Design and Information Elicitation

ABSTRACT When managers rely on their subordinates for local information but cannot commit to how such information is used, the incentives for effort and information elicitation become intertwined. This incentive problem influences the firm's job design decision, that is, whether to assign all tasks in a job to one worker (“individual assignment”) or split those among a group (“team assignment”). Team assignment facilitates information elicitation but suffers from diseconomies of scope in incentive provision. The optimal job design is driven by the workers' likelihood of being informed (about local conditions) and the noise in the performance measure used to reward them.