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Gans & Avi Goldfarb Share X LinkedIn Facebook Bluesky Threads Email Link Working Paper 34639 DOI 10.3386/w34639 Issue Date January 2026 We study automation when tasks are quality complements rather than separable. Production requires numerous tasks whose qualities multiply as in an O-ring technology. A worker allocates a fixed endowment of time across the tasks performed; machines can replace tasks with given quality, and time is allocated across the remaining manual tasks. This "focus" mechanism generates three results. First, task-by-task substitution logic is incomplete because automating one task changes the return to automating others. Second, automation decisions are discrete and can require bundled adoption even when automation quality improves smoothly. Third, labour income can rise under partial automation because automation scales the value of remaining bottleneck tasks. These results imply that widely-used exposure indices, which aggregate task-level automation risk using linear formulas, will overstate displacement when tasks are complements. The relevant object is not average task exposure but the structure of bottlenecks and how automation reshapes worker time around them. * Acknowledgements and Disclosures We thank Refine.ink, ChatGPT 5.2 Pro, and Claude Opus 4.5 for research assistance. Funding from the SSHRC is gratefully acknowledged. Responsibility for all errors remains our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Joshua S. Gans Joshua Gans has drawn on the findings of his research for both compensated speaking engagements and consulting engagements. He has written the books Prediction Machines, Power & Prediction, and Innovation + Equality on the economics of AI for which he receives royalties. He is also chief economist of the Creative Destruction Lab, a University of Toronto-based program that helps seed stage companies, from which he receives compensation. He conducts consulting on anti-trust and intellectual property matters with an association with Keystone Strategy and his ownership of Core Economic Research Ltd. He also has equity and advisory relationships with a number of startup firms. Joshua is also a co-founder of All Day TA. Avi Goldfarb I have received grants supporting my research from multiple sources including the Sloan Foundation (ongoing), the Social Sciences and Humanities Research Council of Canada (ongoing), the Acceleration Consortium (ongoing), the National Science Foundation (most recently 2018), Google (most recently 2009), WPP (most recently 2009), the Net Institute (most recently 2007), Bell Canada (most recently 2006), Plurimus Corporation (most recently 2001), and the Social Science Research Council (most recently 2000). I run a consulting company, Goldfarb Analytics Corporation, that advises organizations on digital and A.I. strategy, including work on legal cases involving large technology companies. Clients have included Adobe, CIBC, the Competition Bureau of Canada, Cornerstone Research (on matters of competition and privacy in the ad tech space), Epic Games (as an expert witness to the court in Australian cases against Google and Apple), Meta/Facebook, the Federal Trade Commission, Keystone Strategy (on AI strategy and on matters of competition in the ad tech space), Microsoft, and RBC. I have given lectures--sometimes paid--at several organizations including Amazon, Hospital for Sick Children, Meta/Facebook, Microsoft, Plus Company, ScotiaBank, TD, and several private equity and venture capital firms. I serve on the scientific advisory board of EnvisionX Capital, a venture capital firm. I am Chief Data Scientist at Creative Destruction Lab, a non-profit organization that helps science-based startups to scale. I served on the steering committee of the CDL-Rapid Screening Consortium, a corporate- and government-funded not-for-profit endeavour to build a scalable workplace COVID screening system to facilitate a return to normal. I hold shares in many large technology companies as part of a well-balanced investment portfolio. I also hold investments in several AI-focused startups. Full disclosure at www.avigoldfarb.com/ disclosure * Citation and Citation Data Copy Citation Joshua S. Gans and Avi Goldfarb, "O-Ring Automation," NBER Working Paper 34639 (2026), https://doi.org/10.3386/w34639. 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