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

Author

Listed:
  • Bennardo, Alberrto

    (Department of Economics and Statistics - University of Salerno)

  • Abatemarco, Antonio

    (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.

Suggested Citation

  • Bennardo, Alberrto & Abatemarco, Antonio, 2024. "Multiple tasks, hard information gathering, muted incentives and specialization by project," CELPE Discussion Papers 170, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    • Handle: RePEc:sal:celpdp:0170
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Information gathering; multiple tasks; incentives; value of information;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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