Building Reputation for Contract Renewal : Implications for Performance Dynamics and Contract Duration
Due to technological progress, recent performance is often more informative about future performance prospects than is older performance. We incorporate information decay in a career concern model in which performance depends on type and effort and contract renewal is based on the performance record. In contrast with the career concern literature (e.g. Lewis, 1986; RJE), contractors work harder when the project approaches renewal date and when their reputation is better. Productive investment are crowded out by window-dressing effort in late contract periods, but it is boosted in early periods. More frequent contract renewals strengthen reputational effects and result in improved performance if the relative cost of investment is low, but otherwise long-term contracts induce more effort. Our results are corroborated by some empirical studies showing that performance improves as the contract approaches renewal date
Year of publication: |
2009
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Authors: | Iossa, Elisabetta |
Other Persons: | Rey, Patrick (contributor) |
Publisher: |
[2009]: [S.l.] : SSRN |
Subject: | Theorie | Theory | Dauer | Duration | Leistungsanreiz | Performance incentive | Erwerbsverlauf | Occupational attainment | Arbeitsvertrag | Labour contract | Reputation | Befristete Beschäftigung | Temporary employment |
Saved in:
Extent: | 1 Online-Ressource (46 p) |
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Series: | CEIS Working Paper ; No. 155 |
Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December, 10 2009 erstellt |
Other identifiers: | 10.2139/ssrn.1521500 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013153224