Flexibility, Rigidity, and Competitive Experimentation

Luca Picariello and Alexander Rodivilov

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We study a framework in which agents can generate signals to increase their expected productivity. Such signals can be generated in heterogeneous environments: a flexible system in which the agent can freely allocate effort across different tasks, and a rigid system in which the agent must devote effort to all tasks. We provide sufficient and necessary conditions for optimal experimentation in each system. Experimentation is less likely if the agent has high bargaining power. Competition within the Flexible system makes specialization more likely. When agents from different systems compete, there is a unique equilibrium where both agents experiment if the Rigid System is restrictive enough.

Keywords: Career Concerns; Experimentation; Learning. (search for similar items in EconPapers)
JEL-codes: D61 D83 I21 I23 I28 J63 J65 (search for similar items in EconPapers)
Date: 2024-06-26
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:724

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