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Motivational Ratings

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Abstract

Rating systems not only provide information to users but also motivate the rated agent. This paper solves for the optimal (effort-maximizing) rating system within the standard career concerns framework. It is a mixture two-state rating system. That is, it is the sum of two Markov processes, with one that reflects the belief of the rater and the other the preferences of the rated agent. The rating, however, is not a Markov process. Our analysis shows how the rating combines information of different types and vintages. In particular, an increase in effort may affect some (but not all) future ratings adversely.

Suggested Citation

  • Johannes Horner & Nicolas Lambert, 2016. "Motivational Ratings," Cowles Foundation Discussion Papers 2035, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:2035
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d20/d2035.pdf
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    Cited by:

    1. Hakenes, Hendrik & Katolnik, Svetlana, 2017. "On the incentive effects of job rotation," European Economic Review, Elsevier, vol. 98(C), pages 424-441.
    2. Ichihashi, Shota, 2025. "Information and policing," Journal of Economic Theory, Elsevier, vol. 225(C).
    3. Kaya, Ayça & Roy, Santanu, 2022. "Market screening with limited records," Games and Economic Behavior, Elsevier, vol. 132(C), pages 106-132.
    4. Sergey Kovbasyuk & Giancarlo Spagnolo, 2024. "Memory and Markets," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(3), pages 1775-1806.
    5. Gradwohl, Ronen & Jelnov, Artyom, 2024. "Partial credence goods on review platforms," Games and Economic Behavior, Elsevier, vol. 148(C), pages 517-534.
    6. Allen Vong, 2025. "Dynamic Mediation and Moral Hazard: From Private To Public Communication," Papers 2511.02436, arXiv.org, revised Dec 2025.
    7. Kuo, Fang-Chang, 2024. "Shirking with good reputation? Evidence from hotel industry," International Journal of Industrial Organization, Elsevier, vol. 97(C).
    8. Bergemann, Dirk & Ottaviani, Marco, 2021. "Information Markets and Nonmarkets," CEPR Discussion Papers 16459, C.E.P.R. Discussion Papers.
    9. Tan, Teck Yong, 2023. "Optimal transparency of monitoring capability," Journal of Economic Theory, Elsevier, vol. 209(C).
    10. Yasui, Yuta, 2021. "Controlling Fake Reviews," MPRA Paper 108177, University Library of Munich, Germany.
    11. Yildirim, Huseyin, 2025. "The economics of career concerns in teamwork," Journal of Economic Theory, Elsevier, vol. 226(C).

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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