Dessein, W, Galeotti, A and Santos, T (2016) Rational Inattention and Organizational Focus. American Economic Review, 106 (6). pp. 1522-1536. ISSN 0002-8282
Abstract
This paper studies optimal communication flows in organizations. A production process can be coordinated ex ante, by letting agents stick to a prespecified plan of action. Alternatively, agents may adapt to task-specific shocks, in which case tasks must be coordinated ex post, using communication. When attention is scarce, an optimal organization coordinates only a few tasks ex post. Those tasks are higher performing, more adaptive to the environment, and influential. Hence, scarce attention requires setting priorities, not just local optimization. Our results provide microfoundations for a central idea in the management literature that firms should focus on a limited set of core competencies.
More Details
Item Type: | Article |
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Subject Areas: | Economics |
Funder Name: | European Research Council, Leverhulme Trust |
Date Deposited: | 18 Oct 2019 10:24 |
Date of first compliant deposit: | 18 Oct 2019 |
Last Modified: | 21 Nov 2024 02:43 |
URI: | https://lbsresearch.london.edu/id/eprint/1249 |