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Career Concerns, Matching, And Optimal Disclosure Policy

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  • Arijit Mukherjee

Abstract

Raiders may suffer from information disadvantage since the current employer is often better informed about his workers' quality. When workers have career concerns and matching influences productivity, the initial employer can strategically disclose information to influence incentives and matching efficiency. Long-term complete contracts induce full disclosure when raiders are perfectly competitive. The optimal short-term contract induces full disclosure if raiders are perfectly competitive, and the workers are risk neutral and are not liquidity constrained. These conditions are not only sufficient but also "almost necessary" for full disclosure. Partial disclosure may be optimal if any of these conditions is relaxed. Copyright © (2008) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Arijit Mukherjee, 2008. "Career Concerns, Matching, And Optimal Disclosure Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(4), pages 1211-1250, November.
    • Handle: RePEc:ier:iecrev:v:49:y:2008:i:4:p:1211-1250
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    Citations

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    Cited by:

    1. Heski Bar-Isaac & Ian Jewitt & Clare Leaver, 2007. "Information and Human Capital Managment," Working Papers 07-28, New York University, Leonard N. Stern School of Business, Department of Economics.
    2. Pavan, Alessandro & Calzolari, Giacomo, 2009. "Sequential contracting with multiple principals," Journal of Economic Theory, Elsevier, vol. 144(2), pages 503-531, March.
    3. Ján Zábojník, 2012. "Promotion tournaments in market equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(1), pages 213-240, September.
    4. Hakenes, Hendrik & Katolnik, Svetlana, 2017. "On the incentive effects of job rotation," European Economic Review, Elsevier, vol. 98(C), pages 424-441.
    5. Heski Bar-Isaac & Raphaël Lévy, 2022. "Motivating Employees through Career Paths," Journal of Labor Economics, University of Chicago Press, vol. 40(1), pages 95-131.
    6. Gian Luigi Albano & Clare Leaver, 2005. "Transparency, Recuitment and Retention in the Public Sector," The Centre for Market and Public Organisation 05/132, The Centre for Market and Public Organisation, University of Bristol, UK.
    7. Heski Bar‐Isaac & Clare Leaver, 2022. "Training, Recruitment, and Outplacement as Endogenous Adverse Selection," Economica, London School of Economics and Political Science, vol. 89(356), pages 849-861, October.
    8. Koch, Alexander K. & Peyrache, Eloic, 2005. "Tournaments, Individualized Contracts and Career Concerns," IZA Discussion Papers 1841, Institute of Labor Economics (IZA).
    9. Alexander K. Koch & Eloïc Peyrache, 2011. "Aligning Ambition and Incentives," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 27(3), pages 655-688.
    10. Clare Leaver & Gian Luigi Albano & University College London and ELSE, 2004. "Transparency, Recruitment and Retention in the Public Sector," Economics Series Working Papers 219, University of Oxford, Department of Economics.
    11. Portilla, Yolanda, 2009. "Career concerns and investment maturity in mutual funds," UC3M Working papers. Economics we091106, Universidad Carlos III de Madrid. Departamento de Economía.
    12. Daniel F. Garrett & Alessandro Pavan, 2012. "Managerial Turnover in a Changing World," Journal of Political Economy, University of Chicago Press, vol. 120(5), pages 879-925.
    13. Arijit Mukherjee, 2008. "Sustaining implicit contracts when agents have career concerns: the role of information disclosure," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 469-490, June.
    14. Miriam Schütte & Philipp Christoph Wichardt, 2013. "Delegation and Interim Performance Evaluation," CESifo Working Paper Series 4193, CESifo.
    15. Ferreira, Daniel & Nikolowa, Radoslawa, 2017. "Adverse Selection and Assortative Matching in Labor Markets," CEPR Discussion Papers 11869, C.E.P.R. Discussion Papers.
    16. Arijit Mukherjee, 2010. "The optimal disclosure policy when firms offer implicit contracts," RAND Journal of Economics, RAND Corporation, vol. 41(3), pages 549-573, September.
    17. Paul Oyer & Scott Schaefer, 2012. "Firm/Employee Matching: An Industry Study of American Lawyers," NBER Working Papers 18620, National Bureau of Economic Research, Inc.
    18. Stephen Eliot Hansen, 2010. "The benefits of limited feedback in organizations," Economics Working Papers 1232, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Günter Strobl & Edward D. Van Wesep, 2013. "Publicizing Performance," Management Science, INFORMS, vol. 59(4), pages 918-932, April.
    20. Stephen Eliot Hansen, 2010. "The Benefits of Limited Feedback in Organizations," Working Papers 490, Barcelona School of Economics.
    21. Marc Blatter & Andras Niedermayer, 2008. "Informational Hold-Up, Disclosure Policy, and Career Concerns on the Example of Open Source Software Development," Working Papers 08-06, NET Institute, revised Sep 2008.
    22. Yasunari Tamada, 2019. "Disclosure of Contract Clauses and Career Concerns," Economics Bulletin, AccessEcon, vol. 39(3), pages 1968-1978.
    23. Katolnik, Svetlana & Hakenes, Hendrik, 2014. "On the Incentive Effect of Job Rotation," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100574, Verein für Socialpolitik / German Economic Association.

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