Tuesday, October 29, 2013

The Philosopher Drinks the Porter?

An interesting theory.  Workaholics have something to do, alcoholics just drink.  But they are the same people.

This paper considers the role of alcohol in agency problems in order to provide an economic rationale for alcoholics and workaholics. In our model, alcohol reduces productivity, but also can make imbibers blurt private information. We show that in the optimal contract, low-productivity workers are compelled to over-indulge in alcohol, while high-productivity workers overproduce output. Thus, workers are made into “alcoholics” and “workaholics” depending on their productivity. We conclude that excessive drinking (working) may be the result, not the cause, of low (high) productivity of workers. 

Nod to Kevin Lewis 

1 comment:

Anonymous said...

TLDR but I do like Porter.