IDEAS home Printed from https://ideas.repec.org/p/dpr/wpaper/1232.html
   My bibliography  Save this paper

Career Concerns and Incentive Compatible Task Design

Author

Listed:
  • Masaki Aoyagi
  • Maxime Menuet

Abstract

This paper studies the optimal disclosure of information about an agent’s talent when it consists of two components. The agent observes the first component of his talent as his private type, and reports it to a principal to perform a task which reveals the second component of his talent. Based on the report and performance, the principal discloses information to a firm who pays the agent the wage equal to his expected talent. We study incentive compatible disclosure rules that minimize the mismatch between the agent’s true talent and his wage. The optimal rule entails full disclosure when the agent’s talent is a supermodular function of the two components, but entails partial pooling when it is submodular. Under a mild degree of submodularity, we show that the optimal disclosure rule is obtained as a solution to a linear programming problem, and identify the number of messages required under the optimal rule. We relate it to the agent’s incentive compatibility conditions, and show that each pooling message has binary support.

Suggested Citation

  • Masaki Aoyagi & Maxime Menuet, 2024. "Career Concerns and Incentive Compatible Task Design," ISER Discussion Paper 1232, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:1232
    as

    Download full text from publisher

    File URL: https://www.iser.osaka-u.ac.jp/library/dp/2024/DP1232.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Anton Kolotilin & Alexander Wolitzky, 2020. "Assortative Information Disclosure," Discussion Papers 2020-08, School of Economics, The University of New South Wales.
    2. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 183-198.
    3. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part I: Comparing Information Structures," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 183-198.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dirk Sliwka, 2001. "On the Costs and Benefits of Delegation in Organizations," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(4), pages 568-590, December.
    2. Jacques Crémer, 2010. "Arm's-Length Relationships without Moral Hazard," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 377-387, 04-05.
    3. Laurent Franckx & Isabelle Brose, 2004. "A theoretical framework for incentives in the public sector," Economics Bulletin, AccessEcon, vol. 10(2), pages 1-8.
    4. Aleksei Smirnov & Egor Starkov, 2019. "Timing of predictions in dynamic cheap talk: experts vs. quacks," ECON - Working Papers 334, Department of Economics - University of Zurich.
    5. Carolyn Pitchik, 2008. "Self-Promoting Investments," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 164(3), pages 381-406, September.
    6. Finneran, Lisa & Kelly, Morgan, 2003. "Social networks and inequality," Journal of Urban Economics, Elsevier, vol. 53(2), pages 282-299, March.
    7. Elliott Ash & W. Bentley MacLeod, 2015. "Intrinsic Motivation in Public Service: Theory and Evidence from State Supreme Courts," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    8. Kondylis,Florence & Stein,Mattea, 2018. "The speed of justice," Policy Research Working Paper Series 8372, The World Bank.
    9. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo.
    10. García-Martínez, Jose A. & Mayor-Serra, Antonio J. & Meca, Ana, 2020. "Efficient Effort Equilibrium in Cooperation with Pairwise Cost Reduction," MPRA Paper 105604, University Library of Munich, Germany.
    11. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 254-286, August.
    12. Martin Byford, 2003. "Moral Hazard From Costless Hidden Actions," Working Papers 2003.03, School of Economics, La Trobe University.
    13. Bonfiglioli, Alessandra & Gancia, Gino, 2015. "Economic Uncertainty and Structural Reforms," CEPR Discussion Papers 10937, C.E.P.R. Discussion Papers.
    14. Bilanakos, Christos, 2013. "Career concerns and firm – sponsored general training," Research in Economics, Elsevier, vol. 67(2), pages 117-132.
    15. Calogero Guccio & Domenico Lisi & Ilde Rizzo, 2019. "When the purchasing officer looks the other way: on the waste effects of debauched local environment in public works execution," Economics of Governance, Springer, vol. 20(3), pages 205-236, September.
    16. Byun, Seong, 2022. "The role of intrinsic incentives and corporate culture in motivating innovation," Journal of Banking & Finance, Elsevier, vol. 134(C).
    17. Mikel Berdud & Juan M. Cabasés Hita & Jorge Nieto, 2012. "Motivational Capital and Incentives in Health Care Organisations," Documentos de Trabajo - Lan Gaiak Departamento de Economía - Universidad Pública de Navarra 1209, Departamento de Economía - Universidad Pública de Navarra.
    18. Gary Charness & Peter Kuhn & Marie Claire Villeval, 2011. "Competition and the Ratchet Effect," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 513-547.
    19. Daniel Krähmer & Roland Strausz, 2023. "Optimal Nonlinear Pricing with Data-Sensitive Consumers," American Economic Journal: Microeconomics, American Economic Association, vol. 15(2), pages 80-108, May.
    20. Bold, Tessa & Kimenyi, Mwangi & Mwabu, Germano & Ng’ang’a, Alice & Sandefur, Justin, 2018. "Experimental evidence on scaling up education reforms in Kenya," Journal of Public Economics, Elsevier, vol. 168(C), pages 1-20.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:1232. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Librarian (email available below). General contact details of provider: https://edirc.repec.org/data/isosujp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.