Focusing Attention in Multiple Tasks

Maximilian Breu

VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking from Verein für Socialpolitik / German Economic Association

Abstract: With increasingly complex workplaces, agents face a multitude of different tasks. Contract theory predicts complex contracts, however, actual contracts are simpler. I resolve this puzzle through agents' limited attention which leads to an instinctive focus on tasks with high outcome variation. The limited attention results in the wrong allocation of effort. This provides an explanation of findings in field studies, when the reduction of additional incentives increases productivity.

Date: 2017
New Economics Papers: this item is included in nep-cbe and nep-mic
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