Career Concerns in a Simple Experimental Labour Market

We experimentally investigate a simple version of Holmström?s career concerns model in which firms compete for agents in two consecutive periods. Profits of firms are determined by agents? unknown ability and the effort they choose. Before making second-period wage offers firms are informed about first-period profits. In a different treatment firms additionally learn the abilities of agents. Theory suggests high first-period equilibrium effort in the hidden ability treatment but no effort elsewhere. However, we find that effort is significantly higher in the revealed ability treatment and therefore conclude that transparency does not weaken, but strengthen career concerns incentives.

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Year of publication:	2003
Authors:	Irlenbusch, Bernd ; Sliwka, Dirk
Publisher:	Bonn : Institute for the Study of Labor (IZA)
Subject:	Leistungsanreiz \| Führungskräfte \| Erwerbsverlauf \| Arbeitsnachfrage \| Spieltheorie \| Experiment \| incentives \| labour market \| reputation \| reciprocity \| career concerns

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Series:	IZA Discussion paper series ; 855
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	368840662 [GVK] hdl:10419/20098 [Handle]
Classification:	J33 - Compensation Packages; Payment Methods ; C91 - Laboratory, Individual Behavior ; C72 - Noncooperative Games
Source:	EconStor