Beiträge zur Jahrestagung des Vereins für Socialpolitik 2017: Alternative Geld- und Finanzarchitekturen - Session: Decision Theory F09-V2
With increasingly complex workplaces, agents face a multitude of different tasks. Contract theory predicts complex contracts, however, actual contracts are simpler. I resolve this puzzle through agents' limited attention which leads to an instinctive focus on tasks with high outcome variation. The limited attention results in the wrong allocation of effort. This provides an explanation of findings in field studies, when the reduction of additional incentives increases productivity.