Deadlines and distractions |
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Authors: | Maria Saez-Marti Anna Sjögren |
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Institution: | a University of Zürich, Institut für Empirische Wirtschaftsforschung, Blümlisalpstrasse 10, CH-8006 Zürich, Switzerland b The Research Institute of Industrial Economics (IFN), Box 55665, 102 15 Stockholm, Sweden c IFAU, Box 513, 751 20 Uppsala, Sweden |
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Abstract: | We consider a task, demanding a sequence of efforts, that must be completed by a deadline. Effort is not contractible. Agents face shocks to their opportunity cost of time and are sometimes distracted from work. We show that agents who are often distracted may outperform agents who are distracted less often. The reason is that anticipation of distractions induces agents to start earlier for precautionary reasons. Principals can increase the probability of completion, and achieve higher profits, by strategically setting “tight” deadlines, provided that the deadlines can be extended with some positive probability. |
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Keywords: | D81 J22 M50 |
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