NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Multitasking, Learning, and Incentives: A Cautionary Tale

Roland G. Fryer, Jr, Richard T. Holden

NBER Working Paper No. 17752
Issued in January 2012
NBER Program(s):   ED   LS

We develop a multi-period, multi-task principal-agent model in which neither the principal nor the agent knows the mapping from actions to outputs. The agent can learn about the production function over time by exerting effort and observing output. The model has a stark prediction: incentives may have a negative impact on agent effort if, by exerting effort, they learn their ability is lower than their prior beliefs. To provide evidence on the model's predictions, we conduct a field experiment in fifty Houston public schools, where students, parents, and teachers were rewarded with financial incentives. The experimental data is consistent with the model's most distinguishing predictions, though other explanations are possible.

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An data appendix is available at http://www.nber.org/data-appendix/w17752

This paper was revised on May 10, 2013

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Document Object Identifier (DOI): 10.3386/w17752

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