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Optimal Design of Peer Review and Self-Assessment Schemes

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  • Baliga, Sandeep
  • Sjostrom, Tomas

Abstract

A principal must decide whether or not to implement a project that originated with one of her employees. Several employees have information about the quality of the project. A successfully implemented project raises the inventor's chance of promotion, at his peer's expense, but a failed project ruins the inventor's career. An employee who has a relatively good reputation (and therefore is happy with the status quo) must be encouraged to promote new ideas. An employee who has a relatively bad reputation (and therefore wants to change the status quo) must be prevented from exaggerating the quality of new ideas. We study incentive-compatible and renegotiation-proof mechanisms, and we find that self-assessment (without any peer reports) is optimal. Copyright 2001 by the RAND Corporation.

Suggested Citation

  • Baliga, Sandeep & Sjostrom, Tomas, 2001. "Optimal Design of Peer Review and Self-Assessment Schemes," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 27-51, Spring.
  • Handle: RePEc:rje:randje:v:32:y:2001:i:1:p:27-51
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    References listed on IDEAS

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    Cited by:

    1. Noriyuki Yanagawa, 2008. "Biased Motivation of Experts: Should They be Aggressive or Conservative?," CARF F-Series CARF-F-133, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Jonathan Treussard, 2005. "Life-Cycle Consumption Plans and Portfolio Policies in a Heath-Jarrow-Morton Economy," Boston University - Department of Economics - Working Papers Series WP2005-033, Boston University - Department of Economics.
    3. Chatterjee Kalyan & Chowdhury Avantika, 2012. "Formation of Citation Networks by Rational Players and The Diffusion of Ideas," Review of Network Economics, De Gruyter, vol. 11(3), pages 1-38, September.
    4. Carrillo, Juan D., 2003. "Job assignments as a screening device," International Journal of Industrial Organization, Elsevier, vol. 21(6), pages 881-905, June.
    5. Jim Engle-Warnick & Andreas Leibbrandt, 2006. "Who Gets The Last Word? An Experimental Study Of The Effect Of A Peer Review Process On The Expression Of Social Norms," Departmental Working Papers 2006-11, McGill University, Department of Economics.
    6. Marx, Leslie M. & Squintani, Francesco, 2009. "Individual accountability in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 260-273, October.
    7. Tamada, Yasunari & Tsai, Tsung-Sheng, 2007. "Optimal organization in a sequential investment problem with the principal's cancellation option," International Journal of Industrial Organization, Elsevier, vol. 25(3), pages 631-641, June.
    8. Johnson, Justin P., 2006. "Collaboration, peer review and open source software," Information Economics and Policy, Elsevier, vol. 18(4), pages 477-497, November.
    9. Gromb, Denis & Martimort, David, 2007. "Collusion and the organization of delegated expertise," Journal of Economic Theory, Elsevier, vol. 137(1), pages 271-299, November.
    10. Dilip Mookherjee, 2006. "Decentralization, Hierarchies, and Incentives: A Mechanism Design Perspective," Journal of Economic Literature, American Economic Association, vol. 44(2), pages 367-390, June.
    11. Tamada, Yasunari & Tsai, Tsung-Sheng, 2014. "Delegating the decision-making authority to terminate a sequential project," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 178-194.
    12. Noriyuki Yanagawa, 2008. "Biased Motivation of Experts: Should They be Aggressive or Conservative?," CIRJE F-Series CIRJE-F-585, CIRJE, Faculty of Economics, University of Tokyo.

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