The Economics of Performance Appraisals
Performance appraisals have become a widespread practice in OECD member countries. However, whereas the problem of constructing an optimal contract with subjective evaluation receives a lot of attention, rmlevel performance appraisals are strikingly left outside of economic theory. The purpose of this paper is threefold: rst, to theoretically de ne what performance appraisals are; second, to analyze the e ects of incentive contracts on e ort and wage using performance appraisals; and third, to theoretically quantify the selection e ects driven by the implementation of performance appraisals.
|Date of creation:||03 Aug 2012|
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