Clerks

• Authors: Daniel Fershtman, Kfir Eliaz and Alexander Frug.
• BSE Working Paper: 1535 | November 25
• Keywords: moral hazard , strategic servers , non-monetary incentives , optimal scheduling , idle time , multi-server systems
• JEL codes: D82, J24, C73

We study optimal dynamic scheduling of workers to tasks when task completion is privately observed —so that workers can delay the release of finished tasks — and idle time is the only available incentive instrument. We characterize a scheduling rule, and its induced equilibrium, that maximizes expected discounted output. Unless workers are inherently slow, production alternates between efficient phases and delays. Our analysis reveals a trade-off between the quality and the size of the workforce. We also present several extensions, illustrating the versatility of the framework.