Multiple tasks, hard information gathering, muted incentives and specialization by project

Alberrto Bennardo () and Antonio Abatemarco ()
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Alberrto Bennardo: Department of Economics and Statistics - University of Salerno, Postal: via Giovanni Paolo II, 132, 84084 - Fisciano (SA), ITALY, https://docenti.unisa.it/005643/home
Antonio Abatemarco: CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy, Postal: via Giovanni Paolo II, 132, 84084 - Fisciano (SA), ITALY, https://docenti.unisa.it/004121/home

No 170, CELPE Discussion Papers from CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy

Abstract: Managers perform two heterogenous set of tasks: coordination of production and information gathering activities; moreover, their monetary incentives commonly use few contractible signals. Why are these patterns so common ? Is the development of information markets going to generate Smithian specialization and promote decentralization of information gathering ? How is this going to affect managerial incentive schemes ? Our paper aims at making an initial step toward addressing all these issues within a simple multiple task set-up. We identify an informational complementarity, shaping all the main trade-offs of our analysis, which leads to the following results. First, monetary incentives for information gathering activities are optimally muted under mild conditions on actions' disutility, if the operational value of information is not "very large", or the implementation activity is very productive and very costly to incentivize. Second, public contractible information crowds-in information gathering within firms. Third, specialization by project, instead of by function, turns out to always be second best optimal in the absence of strong substitution e§ects across activities. Even in the presence of sizeable substitution e§ects, tasks' integration is still preferred, provided that the cost of incentivizing information gathering and/or the productivity of both activities are large enough.

Keywords: Information gathering; multiple tasks; incentives; value of information (search for similar items in EconPapers)
JEL-codes: D80 D86 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2024-12-12
New Economics Papers: this item is included in nep-mic and nep-ppm
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