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Managerial Attention and Worker Engagement

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  • Halac, Marina
  • Prat, Andrea

Abstract

We study a dynamic agency problem with two-sided moral hazard: the worker chooses whether to exert effort or shirk; the manager chooses whether to invest in an attention technology to recognize worker performance. In equilibrium the worker uses past recognition to infer managerial attention. An engagement trap arises: absent recent recognition, both worker effort and managerial investment decrease, making a return to high productivity less likely as time passes. In a sample of ex-ante identical firms, firm performance, managerial quality, and worker engagement display heterogeneity across firms, positive correlation, and persistence over time.

Suggested Citation

  • Halac, Marina & Prat, Andrea, 2014. "Managerial Attention and Worker Engagement," CEPR Discussion Papers 10035, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10035
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    References listed on IDEAS

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    1. Roland Strausz, 1997. "Delegation of Monitoring in a Principal-Agent Relationship," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 337-357.
    2. Dur, Robert & Non, Arjan & Roelfsema, Hein, 2010. "Reciprocity and incentive pay in the workplace," Journal of Economic Psychology, Elsevier, vol. 31(4), pages 676-686, August.
    3. Fahad Khalil, 1997. "Auditing Without Commitment," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 629-640, Winter.
    4. Sylvain Chassang, 2010. "Building Routines: Learning, Cooperation, and the Dynamics of Incomplete Relational Contracts," American Economic Review, American Economic Association, vol. 100(1), pages 448-465, March.
    5. Simon Board & Moritz Meyer‐ter‐Vehn, 2013. "Reputation for Quality," Econometrica, Econometric Society, vol. 81(6), pages 2381-2462, November.
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    Cited by:

    1. Cordella, Antonio & Cordella, Tito, 2017. "Motivations, monitoring technologies, and pay for performance," LSE Research Online Documents on Economics 68713, London School of Economics and Political Science, LSE Library.
    2. de Clippel, Geoffroy & Eliaz, Kfir & Rozen, Kareen, 2016. "The Silent Treatment," CEPR Discussion Papers 11335, C.E.P.R. Discussion Papers.
    3. Heski Bar-Isaac & Joyee Deb, 2016. "Reputation with Opportunities for Coasting," Cowles Foundation Discussion Papers 2041, Cowles Foundation for Research in Economics, Yale University.
    4. Cordella, Antonio & Cordella, Tito, 2017. "Motivations, monitoring technologies, and pay for performance," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 236-255.
    5. Mira Frick & Yuhta Ishii, 2015. "Innovation Adoption by Forward-Looking Social Learners," Cowles Foundation Discussion Papers 1877, Cowles Foundation for Research in Economics, Yale University.
    6. Dilmé, Francesc & Garrett, Daniel, 2015. "Residual Deterrence," CEPR Discussion Papers 10994, C.E.P.R. Discussion Papers.
    7. Benjamin M. Artz & Amanda H. Goodall & Andrew J. Oswald, 2017. "Boss Competence and Worker Well-Being," ILR Review, Cornell University, ILR School, vol. 70(2), pages 419-450, March.
    8. Steven Blader & Claudine Gartenberg & Rebecca Henderson & Andrea Prat, 2015. "The Real Effects of Relational Contracts," American Economic Review, American Economic Association, vol. 105(5), pages 452-456, May.

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