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Optimal Design of Peer Review and Self-Assessment Schemes

  • Baliga, Sandeep
  • Sjostrom, Tomas

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.

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Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 32 (2001)
Issue (Month): 1 (Spring)
Pages: 27-51

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Handle: RePEc:rje:randje:v:32:y:2001:i:1:p:27-51
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