Björn Bartling, Ernst Fehr, and Klaus M. Schmidt. Screening, Competition, and Job Design: Economic Origins of Good Jobs

Björn Bartling, Ernst Fehr, and Klaus M. Schmidt. Screening, Competition, and Job Design:  Economic Origins of Good Jobs

“Trust is good, control is better.” This famous quote, attributed to Vladimir Lenin, refers to a fundamental question in any principal-agent relationship: to what extent should the principal leave discretion to the agent? Standard principal-agent theory suggests that discretion should be limited as much as possible; otherwise the agent will either exploit his freedom to shirk or he will have to be offered expensive monetary incentives to choose actions that are in the principal’s interest. Similarly, Taylorism, the dominant paradigm of scientific workplace organization in the first two-thirds of the twentieth century, is based on the assumption that workers will always work at the slowest rate that goes unpunished. Standardization of the production process is therefore essential, so that the workers’ efforts can be effectively monitored and controlled.


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Keywords: The New Economy

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