Article

Career Concerns with Exponential Learning

Alessandro Bonatti et Johannes Hörner

Résumé

This paper analyzes the impact of market structure on career concerns. Effort increases the probability that a skilled agent achieves a one-time breakthrough. Wages are based on assessed ability and on expected output. For any wage, the agent works too little, too late. Under short-term contracts, effort and wages are single-peaked with seniority, due to the strategic substitutability of effort levels at different times. Both delay and underprovision of effort worsen if effort is observable. Commitment to wages by competing firms mitigates these inefficiencies. In that case, the optimal contract features piecewise constant wages and severance pay.

Mots-clés

career concerns; experimentation; career paths; up-or-out; reputation;

Codes JEL

  • D82: Asymmetric and Private Information • Mechanism Design
  • D83: Search • Learning • Information and Knowledge • Communication • Belief
  • M52: Compensation and Compensation Methods and Their Effects

Remplace

Alessandro Bonatti et Johannes Hörner, « Career Concerns with Exponential Learning », TSE Working Paper, n° 17-793, mars 2017.

Référence

Alessandro Bonatti et Johannes Hörner, « Career Concerns with Exponential Learning », Theoretical Economics, vol. 12, n° 1, 2017, p. 425–475.

Voir aussi

Publié dans

Theoretical Economics, vol. 12, n° 1, 2017, p. 425–475