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Managerial Attention and Worker Engagement

Listed author(s):
  • Halac, Marina
  • Prat, Andrea

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.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 10035.

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Date of creation: Jun 2014
Handle: RePEc:cpr:ceprdp:10035
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  1. Petri Böckerman & Pekka Ilmakunnas, 2012. "The Job Satisfaction-Productivity Nexus: A Study Using Matched Survey and Register Data," ILR Review, Cornell University, ILR School, vol. 65(2), pages 244-262, April.
  2. Roland Strausz, 1997. "Delegation of Monitoring in a Principal-Agent Relationship," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 337-357.
  3. 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.
  4. Fahad Khalil, 1997. "Auditing Without Commitment," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 629-640, Winter.
  5. 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.
  6. Simon Board & Moritz Meyer‐ter‐Vehn, 2013. "Reputation for Quality," Econometrica, Econometric Society, vol. 81(6), pages 2381-2462, November.
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