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Career concerns in a simple experimental labour market

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  • Irlenbusch, Bernd
  • Sliwka, Dirk

Abstract

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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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 50 (2006)
Issue (Month): 1 (January)
Pages: 147-170

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Handle: RePEc:eee:eecrev:v:50:y:2006:i:1:p:147-170

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Cited by:
  1. Frederiksen, Anders, 2010. "Earnings Progression, Human Capital and Incentives: Theory and Evidence," IZA Discussion Papers 4863, Institute for the Study of Labor (IZA).
  2. Leif Brandes & Egon Franck, . "Social Preferences or Personal Career Concerns? Field Evidence on Positive and Negative Reciprocity in the Workplace," Working Papers 0134, University of Zurich, Institute for Strategy and Business Economics (ISU).
  3. Alexander K. Koch & Albrecht Morgenstern & Philippe Raab, 2004. "An experimental test of career concerns," Bonn Econ Discussion Papers bgse20_2004, University of Bonn, Germany.
  4. Bernd Irlenbusch, 2006. "Experimental perspectives on incentives in organisations," Central European Journal of Operations Research, Springer, vol. 14(1), pages 1-24, February.
  5. Gary Charness & Peter J. Kuhn, 2010. "Lab Labor: What Can Labor Economists Learn from the Lab?," NBER Working Papers 15913, National Bureau of Economic Research, Inc.
  6. Alexander K. Koch & Albrecht Morgenstern & Philippe Raab, 2009. "Career concerns incentives: An experimental test," Economics Working Papers 2009-01, School of Economics and Management, University of Aarhus.

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