A THEORY OF RESPONSIBILITY IN ORGANIZATIONS

This article considers the implications of allowing a manager discreti on over task assignment. If employees earn rents from carrying out tas ks, and the manager cannot ''sell'' the jobs to her subordinates, she has an incentive to take on more tasks than is optimal and delegate to o few to a subordinate. I show that although firms can alleviate this incentive by offering output-contingent contracts, even with the optim al contract, (i) the manager carries out too many tasks, (ii) she exer ts too much effort on her own tasks, and (iii) her subordinate exerts too little effort on his tasks.