Economics Letters 199 (2021) 109699

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Economics Letters
journal homepage: www.elsevier.com/locate/ecolet

Specialist vs. Generalist: Efficiency in Multitasking

∗
Clemens Buchen a , Jenny Kragl b , , Alberto Palermo c
a
WHU-Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany
b
EBS Universität für Wirtschaft und Recht, Group of Economics & Philosophy, Rheingaustr. 1, 65375 Oestrich-Winkel, Germany
c
Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University, Behringstr. 21, 54296 Trier, Germany

article info a b s t r a c t

Article history: We show that under multitasking — where tasks can be substitutes or complements — a specialist
Received 12 November 2020 worker with an uneven skill distribution can outperform a generalist with higher average skills. We
Received in revised form 9 December 2020 use a principal–agent model to study worker efficiency and welfare. The main result is robust if a
Accepted 14 December 2020
rent-efficiency trade-off is added.
Available online 28 December 2020
© 2020 Elsevier B.V. All rights reserved.
JEL classification:
D82
D86
M12
M52
M54

Keywords:
Multitask model
Incentives
Specialization
Generalist
Skills

1. Introduction in single-task settings the concept of efficiency is clear, less

Workers can be generalists or specialists. That is, their skills
can be more or less even across different tasks of a job. In a
multitasking setting, we show that a firm may prefer to employ a
specialist even if he has lower abilities on average. In such a case,
the specialist exploits his higher ability at a given task to a greater
degree than the generalist. Notably, this not only holds when
tasks are substitutes but also when they are complements. These
findings enrich our understanding of the measurement of worker
skills in labor markets. Specifically, our model suggests that the
fit between workers’ skill distribution and the firm’s specificities
becomes important.
Starting with Holmström and Milgrom (1991) and
Baker (1992), the literature on multitasking in principal–agent
settings is vast, and we contribute by proposing a study on the
efficiency of agent performance. Unlike much of the existing
literature, we do not focus on imperfect performance measures
and effort distortions (see, e.g., Feltham and Xie 1994, Baker 2002,
or Schnedler 2008) but rather on efficiency.1 In fact, whereas
emphasis has been given to agents who have multiple task as-
signments. Prasad (2009) and DeVaro and Gürtler (2016) propose
approaches to study the relationship between agents’ degree
of specialization and the optimal task assignment. The former
studies how to optimally allocate tasks among different spe-
cialized agents. The latter use a dynamic model to study if
specialization or multitasking is optimal when employees have
a strategic incentive to shirk in a distasteful task. Neither paper,
however, considers when it is best to hire less skilled workers
and, more importantly, how this decision varies according to the
relation between the degree of task interaction and the degree of
specialization.
We consider an efficient bonus contract as in Kim (1997),
conditioned on a favorable effort proxy as in Milgrom (1981).
We distinguish generalists with a more balanced skill set and
specialists who exhibit particular expert skills in one job dimen-
sion. In spirit, our idea is related to the skill-weights approach to
firm-specific human capital by Lazear (2009), whereby all single

∗ Corresponding author.
E-mail addresses: clemens.buchen@whu.de (C. Buchen),
jenny.kragl@ebs.edu (J. Kragl), palermo@iaaeu.de (A. Palermo).
1 Several papers study optimal job design and the optimality of task integra-
tion or separation in various principal–agent settings with homogeneous agents.
See, e.g., Itoh (1994), Zhang (2003), Hughes et al. (2005), or Kragl and Schöttner
(2014) and the literature therein. Laux (2001) and Schmitz (2005) study task
bundling under limited liability when, similar to our setting, task-dependent
performance measures exist. Candidate selection across heterogeneous agents is
investigated by Kragl et al. (2019) for the case of family firms.

https://doi.org/10.1016/j.econlet.2020.109699
0165-1765/© 2020 Elsevier B.V. All rights reserved.
C. Buchen, J. Kragl and A. Palermo
skills are general, but firms may require them with different
(firm-specific) weights attached. Similarly, in our model, a more
(un)even skill distribution reflects a more general (specific) skill
set.
2. Model
Consider a principal who delegates two tasks of a given project
to an agent. Parties are risk neutral. In exerting efforts ei ∈
[0, 1], i ∈ {1, 2}, an agent faces a cost C (e1 , e2 ) = 21 (e21 + e22 ).
Efforts generate a non-verifiable revenue for the principal given
by R(e1 , e2 ) = a1 e1 + a2 e2 + se1 e2 .2 Think of ai > 0 as the agent-
specific skill in task i and of s as an exogenous project-specific
technology parameter. Tasks may yield productive synergies (s >
0), or they are mutually detrimental (s < 0).3 As an example
for productive complementarity, consider advertising and sales
efforts in a retail company. These two tasks typically enforce each
other whereas selling and cleaning in a small bakery shop con-
stitute substitutes because they get in each other’s way. Further,
notice that the task dependence is in general firm- or project-
specific. To see this, consider the example of professors doing
academic research and fundraising. The extent to which research
activities will enhance fundraising success and vice versa will
depend on, say, whether the university is more teaching-oriented
or rather research-focused.
The principal remunerates the agent according to an incentive
scheme consisting of a fixed payment w and bonuses b1 and b2
upon separately observing two uncorrelated binary signals σi ∈
{0, 1}. The probability of observing a favorable signal is given by
Pr [σi = 1|ei ] = ei . For simplicity, outside options are zero.
In expectation, the principal’s profit π and the agent’s utility
u are given by:
π = a1 e1 + a2 e2 + se1 e2 − w − e1 b1 − e2 b2
u = w + e1 b1 + e2 b2 − 21 e21 − 12 e22
The principal maximizes (1) under the standard participation
and incentive constraints. Maximizing (2) with respect to efforts
yields incentive-compatible effort e∗i = bi . The participation
constraint is binding; i.e., the principal proposes w such that the
agent’s expected utility is equal to his outside option. Substituting
e∗1 and e∗2 in (1) and maximizing over b1 and b2 yields:
a1 + a2 s
b∗1 = , more unevenly distributed abilities imply more unevenly allo-
1 − s2
a2 + a1 s
b∗2 = , increases the costs. On the other hand, the complementarity be-
1 − s2
where s ∈ (−1, 1) ensures the strict concavity of the objective
function. Since we are interested in multitasking, we assume that
|s| is sufficiently small.
Given the assumption of risk neutrality and the absence of lim-
ited liability, the principal induces first-best efforts.4 The profit
function is:
a21 + 2sa1 a2 + a22
π∗ =
2(1 − s2 )
2 The model would be equivalent with non-deterministic revenue R ∈ {0, 1},
where Pr [R = 1|e1 , e2 ] = a1 e1 + a2 e2 + se1 e2 .
3 Notice that the task interdependence persists if the tasks were performed
by two agents. Consequently, our model focus on the single-agent case is
innocuous since hiring two agents can never be dominant. Moreover, if s < 0, it
is profitable for the principal to still have the agent exert efforts in both tasks.
4 If the agent is protected by limited liability (i.e., w
⩾ 0) our results are
qualitatively unchanged. In fact, the agent would obtain a rent, thereby scaling
down the principal’s expected profit. See also Footnote 5.
Economics Letters 199 (2021) 109699
3. Specialist vs. Generalist
In the remainder, w.l.o.g. we assume that a1 ⩾ a2 and consider
two agents A and B who have different skill sets (a1 , a2 ) equal to
(α1 , α2 ) and (β1 , β2 ), respectively. Define
θ = α1 + α2 − β1 − β2 ⩾ 0
so that agent A has (weakly) higher average skills than agent
B. Further consider the ratio a +1a ∈ [ 12 , 1), which reflects the
a
1 2
degree of specialization of an agent. The closer the ratio is to one,
the more specialized the agent. Conversely, the closer the ratio to
1
2
, the more general the agent’s skill set. We assume that agent B
is more specialized than agent A:
β1 α1
> .
β1 + β2 α1 + α2
We analyze under which conditions the principal optimally
selects the specialist B or the generalist A.
Proposition 1. There exists a θ such that for θ < θ the follow-
ing holds. If s < s, the specialist is preferred, where s ≡ 1 −
2θ (β1 +β2 )+θ 2
2(α α −β β )
⋛ 0. The generalist is preferred for s > s.
1 2 1 2
Proof. Observe that the value functions can be written as:
(α1 + α2 )2 − 2α1 α2 (1 − s)
π ∗ (A) = (3)
2(1 − s2 )
(β1 + β2 )2 − 2β1 β2 (1 − s)
π ∗ (B) = (4)
2(1 − s2 )
Using α1 + α2 = β1 + β2 + θ , setting (3) equal to (4), and solving
one finds s. Last, observe that θ such that s ⋛ 0 can exist. ■
If θ ⩾ θ , then the difference in average abilities is so large
(1) that the generalist will always be preferred. If however θ < θ ,
(2) the principal prefers the specialist B for sufficiently small s even
though the latter is less skilled on average. That is, agent B’s
higher expertise in one task dominates his general ability disad-
vantage for a range of task interdependencies, generally including
both complementary tasks and substitutes.
To grasp the intuition, suppose that s = 0 and θ = 0.
Then, agent B’s abilities are a mean-preserving spread of agent
A’s abilities. To highlight the agents’ relative performance, con-
sider the following two countervailing effects. On the one hand,
cated efforts. Given the convexity of the effort-cost function, this
tween task-specific abilities and efforts generates a comparative
advantage for B in that the marginal increase in cost is more
than compensated by the marginal increase in revenue.5 Hence,
for a mean-preserving spread, a marginal increase in the ability
spread raises the specialist’s comparative advantage at the mar-
gin. Conversely, an overall decrease in the specialist B’s average
abilities (i.e., θ > 0 and increasing) represents the marginal cost.
As long as the difference in average abilities is not too large,
for s = 0, the specialist B’s comparative advantage trumps his
lower average ability. For s < 0, agent B’s comparative advantage
is reinforced because exerting uneven efforts strongly mitigates
the negative substitutability effect coming from the interaction
term se1 e2 in the revenue function. The specialist’s comparative
advantage can persist if s > 0 but relatively small. Yet, as s
increases further, agent A mores strongly reaps the productive
5 Observe that this fundamental trade-off extends to the case of limited
liability. In this case, the principal would set w = 0 and pay a rent equal to
e21 /2 + e22 /2, thereby leaving the fundamental cost structure unchanged.
2
C. Buchen, J. Kragl and A. Palermo
Fig. 1. Value functions for two numerical examples. Solid line: πA∗ (profit with generalist). Dashed line: πB∗ (profit with specialist).
benefits coming from task complementarity by performing more
evenly distributed efforts. Accordingly, for sufficiently large s,
the principal prefers the generalist A. The extent of the afore-
mentioned range of task interdependence is subject of the next
corollary to Proposition 1.
Corollary 1. Other things being equal, the specialist will be pre-
ferred to the generalist for a larger range of s if (i) the generalist
becomes less skilled on average (i.e., θ decreases), (ii) the skill set of
the generalist becomes more balanced (i.e., holding α1 +α2 constant,
α1
α +α
→ 12 ), or (iii) the skill set of the specialist becomes more
1 2
β1
imbalanced (i.e. holding β1 + β2 constant, β1 +β2
→ 1).
Proof. Recall that s < 1. (i) Since profits are increasing in s, and
have a (potential) intersection at s it immediately follows that an
increase in the individual abilities results in an upward shift of the
respective value function π ∗ (s). Hence, an increase of θ negatively
impacts s and if θ → 0+ , then s → 1. (ii) From inspection of s, if
α1 +
α1 +α2
→ 12 then the product α1 α2 increases which implies that
s increases; a similar reasoning proves (iii). ■
The rationale is obvious for (i). For (ii) and (iii), more even
skills imply a more even effort allocation. As a consequence, the
specialist’s comparative advantage is relatively more pronounced.
Hence, the generalist’s advantage arising from the productive
synergies can overcome the specialist’s comparative advantage
only for sufficiently large s.
Fig. 1 numerically illustrates the result in Corollary 1(iii). The
solid line shows the firm profit for the generalist, whereby α1 =
11
20
and α2 = 10 20
. Firm profit for the specialist is shown by dashed
lines, whereby β1 = 20 13
and β2 = 20 6
in the left and β1 = 20
15
and β2 = 20 in the right panel. The generalist A is more skilled
4
than the specialist B. Moreover, the specialist B exhibits a higher
degree of specialization in the right panel. Raising the degree
of specialization enlarges the set of values of s for which the
specialist is preferred. Here, the range extends to positive values
of s even though in this range two forces are working against
the specialist. Not only is he less skilled than the generalist on
average but also the task complementarity is in favor of the
generalist. Still the specialist outperforms the generalist due to
the comparative advantage arising from his expert skills in one
task.
4. Conclusion
In our model, the single source of worker discrimination is
efficiency. We show under which conditions the principal would
actually opt for an expert who is, on average, less skilled than the
generalist. Notably, our main results remains valid if we added
sources of inefficiencies such as risk aversion or limited liability.
3
Economics Letters 199 (2021) 109699
The paper suggests that, in an empirical analysis, caution
should be taken when measuring skill levels. Firstly, our re-
sults underscore the importance of taking into account both the
individual worker’s traits and their fit to the given job descrip-
tion, especially in terms of the depth of specialization. Secondly,
painting with a broader brush, one could interpret the task in-
terdependence in our model as a measure of firm productivity.
Firms would then be differentiated according to the extent of
complementarity they (are able to) foster between tasks. Accord-
ing to the theory of positive assortative matching (Becker 1973),
firms hire higher-skilled workers, whereby workers are sorted by
one dimension (type) and preferences are such that higher types
are preferred over lower types (see Hao 2017 for a review). In
this respect, our findings suggest that, when workers differ in
multiple dimensions (e.g., abilities across tasks), it is not neces-
sarily true that more productive firms prefer to hire workers that
are more skilled on average. Specifically, the definition of high
skills then extends beyond simple measures of averages across
several dimensions but should also take into account the fit be-
tween the worker’s skill distribution and the firm’s idiosyncratic
specificities.
Acknowledgments
We thank an anonymous referee for thoughtful and very help-
ful comments and suggestions that helped improve the exposi-
tion of the paper.
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