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Worker Reputation and Productivity Incentives

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  • Aron, Debra J

Abstract

This paper examines firms' problems of how to motivate risk-averse workers not to shirk whe n workers' utility functions are unknown. The problem is studied in a two-period setting in which a worker's actions today can influence n ot only his compensation today but the firms' beliefs about his prefe rences. Firms cannot credibly commit to ignore the revealed informati on, so workers' actions today affect their future compensation contra cts. It is shown that, in the Wilson-Miyazaki equilibrium, firms may pool workers and learn about their types gradually over time rather t han inducing them to separate and reveal their types immediately. Copyright 1987 by University of Chicago Press.

Suggested Citation

  • Aron, Debra J, 1987. "Worker Reputation and Productivity Incentives," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 87-106, October.
  • Handle: RePEc:ucp:jlabec:v:5:y:1987:i:4:p:s87-106
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    Cited by:

    1. Kimiko Terai & Amihai Glazer, 2014. "Budgets under Delegation," Keio-IES Discussion Paper Series 2014-007, Institute for Economics Studies, Keio University.
    2. Hans Gersbach & Amihai Glazer, 2009. "High Compensation Creates a Ratchet Effect," Economic Journal, Royal Economic Society, vol. 119(539), pages 1208-1224, July.
    3. Botond Koszegi & Wei Li, 2002. "Ambition and Talent," IEHAS Discussion Papers 0214, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    4. David E. M. Sappington, 1991. "Incentives in Principal-Agent Relationships," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 45-66, Spring.
    5. C. Stowe, 2009. "Incorporating morale into a classical agency model: implications for incentives, effort, and organization," Economics of Governance, Springer, vol. 10(2), pages 147-164, April.
    6. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June.
    7. Kimiko Terai & Amihai Glazer, 2015. "Principal-Agent Problems When Principal Allocates a Budget," Keio-IES Discussion Paper Series 2015-012, Institute for Economics Studies, Keio University.
    8. Daniel R. Vincent, 1989. "Bilateral Monopoly, Non-durable Goods and Dynamic Trading Relationships," Discussion Papers 832, Northwestern University, Center for Mathematical Studies in Economics and Management Science.

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