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Career concerns incentives: An experimental test

  • Alexander K. Koch
  • Albrecht Morgenstern
  • Philippe Raab

    ()

    (School of Economics and Management, University of Aarhus, Denmark)

Holmström’s (1982/99) career concerns model has become a workhorse for analyzing agency issues in many fields. The underlying signal jamming argument requires players to use information in a Bayesian way, which is difficult to directly test with field data: typically little is known about the information that individuals base their decisions on. Our laboratory experiment provides prima facie evidence: i) the signal jamming mechanism successfully creates incentives on the labor supply side; ii) decision errors take time to decrease; iii) while subjects’ average beliefs are remarkably consistent with play, a mild winner’s curse arises on the labor demand side.

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Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2009-01.

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Length: 37
Date of creation: 09 Jan 2009
Date of revision:
Handle: RePEc:aah:aarhec:2009-01
Contact details of provider: Web page: http://www.econ.au.dk/afn/

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