Coordinated Shirking in Technology Adoption

Abstract

This paper studies a model of technology adoption: a manager tries to induce a group of workers to exert costly effort to vet a new technology before they choose whether to use it. The manager finds it too costly to simultaneously replace large groups of unproductive workers, so they shirk when coordination is possible. Widely applicable technology expands productive possibilities but also provides an opportunity for coordinated shirking, and can thus lead to widespread production failure. Furthermore, even workers who learn that they are using flawed technology may continue to do so. Applications include mortgage securitization in the financial crisis of 2008, and the adoption of generative artificial intelligence.