Optimal Scheduling under Adverse Selection & Hidden Actions; Murali Agastya (The University of Sydney)

Abstract

We develop a model of scheduling of tasks under asymmetric with potential applications ranging sequential R&D, proxy warfare to job assignment. The characteristics of individual tasks exhibit intuitive tradeoffs  in the relative ease of completion versus their essentiality to the overall project.  Subject to moral hazard and adverse selection, in what order should the Principal commission the tasks and when should she terminate the project? What investments into changing tasks' characteristics yield the highest marginal profit? We show that, despite informational constraints, a simple index – a task's effective marginal contribution – determines the optimal schedule/mechanism.

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