49 research outputs found
Multiple tasks, hard information gathering, muted incentives and specialization by project
No full textManagers 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 a§ect 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 effects across activities. Even in the presence of sizeable substitution effects, tasks' integration is still preferred, provided that the cost of incentivizing information gathering and/or the productivity of both activities are large enough
Competition with Endogenous Health Risks
No full textWe study an economy where agents' productivity and labor endowment depend on their health status, and indivisible occupational choices affect individual health distributions. We show that efficiency requires cross-transfers across occupations. Moreover, workers with relatively less safe jobs must get positive transfers whenever labor supply is not very reactive to wages, a condition in line with the findings of a large empirical literature. In these instances, compensating wage differentials equalizing the utilities of ex ante identical workers in different jobs undermine ex ante efficiency. Moreover, competitive equilibria where only assets with deterministic payoffs are traded are not first-best. Finally, we show that simple transfer schemes, implemented through linear subsidies to health insurance, enhance efficiency. (JEL: D5, D61, D80
Multiple Bank Lending, Creditor Rights and Information Sharing
No full textMultiple bank lending induces borrowers to take too much debt
when creditor rights are poorly protected; moreover, banks
wish to engage in opportunistic lending at their competitors’
expenses if borrowers’ collateral is sufficiently risky. These
incentives lead to credit rationing and posit
ive-profit interest rates, possibly exce
eding the monopoly level. If banks share
information about past debts and seniority vi
a credit reporting systems, the incentive
to overborrow is mitigated: interest and
default rates decrease; credit access improves if the value of co
llateral is not very volatile, but worsens otherwise. Recent
empirical studies report evidence consist
ent with these predictions. The paper also
shows that private and social incentives
to share information are not necessarily aligned.
JEL classification
: D73, K21, K42, L5
