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The economics of career concerns in teamwork

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  • Yildirim, Huseyin

Abstract

This paper examines incentives in teams of career-concerned members, where effort and talent can be substitutes (Holmström, 1999) or complements (Dewatripont et al., 1999). It is shown that the degree of effort-talent complementarity determines which team member exerts more effort and thus gains or loses more reputation following team performance. The paper argues that organizations can boost incentives by promoting concern for collective reputation. Strategies to achieve this include facilitating team cooperation, limiting external competition for individual talent, and positively sorting talent into teams. The paper further explores optimal performance ratings to motivate teams when the organization has easy access to individual outputs. These ratings generally deviate from team output and may even induce competition, depending on the signal-to-noise ratio and talent correlations.

Suggested Citation

  • Yildirim, Huseyin, 2025. "The economics of career concerns in teamwork," Journal of Economic Theory, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:jetheo:v:226:y:2025:i:c:s0022053125000638
    DOI: 10.1016/j.jet.2025.106017
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    More about this item

    Keywords

    Teamwork; Career concerns; Collective reputation; Performance rating;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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