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Keynote Presentation - A simple model of burnout - Arghya Ghosh

Tracks
Room: CBE LT4
Thursday, June 29, 2023
11:30 AM - 12:25 PM

Overview

THE ECONOMICS OF WORKING CONDITIONS I Convenor: Kieron Meagher


Speaker

Professor Arghya Ghosh
Professor
UNSW

A simple model of burnout

Abstract

We develop a simple, two-period model with firms and workers, where workers can experience burnout in the workplace. Firms have production targets in each period. To meet its target, firms hire workers who exert effort and earn wages. A worker can supply up to one unit of effort per period. If the total amount of effort across two periods exceeds a threshold, a worker can suffer burnout. If burnout occurs, production targets are not met and both workers and firms earn zero. While the distribution of the threshold effort level (beyond which burnout occurs) is known to both firms and workers, neither a worker nor his employer knows the worker’s exact threshold ex-ante. Firms can deploy costly resources to prevent burnout and avoid (potential) loss of output. Workers can always, and specifically, at the end of the first period, quit the firm for a stress-free job and avoid burnout. Nevertheless, for a range of parameter values, there exists a unique equilibrium where firms deploy resources, workers exert less than full effort in the first period, and yet burnout occurs in the second period with positive probability. An increase in competition reduces resources deployed by the firms and increases the probability of worker burnout in equilibrium.

Biography

Arghya Ghosh is a Professor at the School of Economics in UNSW Business School. Arghya is an applied theorist with research interests in industrial organization and international trade. Competition among firms underpins a large body of Arghya's work which is often motivated by policy relevant issues: desirability of entry, infrastructure investment, imperfect property rights, competitor collaboration and partial equity ownership arrangement. His work has appeared in leading journals including RAND Journal of Economics, Journal of Economic Behavior and Organization, Economic Theory and European Economic Review. Currently, Arghya serves as an Associate Editor at Journal of Economic Behavior and Organization.
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