Belief Precision and Effort Incentives in Promotion Contests

Aufsätze referiert extern - Web of Science 589 / 2015

Jeanin Miklós-Thal, Hannes Ullrich

In: The Economic Journal 125 (2015), 589, S. 1952-1963

Abstract

The career concerns literature predicts that incentives for effort decline as beliefs about ability become more precise (Holmström, 1982, 1999). In contrast, we show that effort can increase with belief precision when agents compete for promotions to better paid jobs that are assigned on the basis of perceived abilities. In this case, an intermediate level of precision provides the strongest incentive for effort, with effort increasing (decreasing) when beliefs are less (more) precise.

Hannes Ullrich

Wissenschaftlicher Mitarbeiter in der Abteilung Unternehmen und Märkte