IDEAS home Printed from https://ideas.repec.org/p/nwu/cmsems/1213.html
   My bibliography  Save this paper

Not Invented Here

Author

Listed:
  • Sandeep Baliga
  • Tomas Sjostrom

Abstract

We consider the problem of inducing agents who are concerned with their careers to reveal their private information about a project which has originated with one of them. A successful project raises the inventor's chance of promotion, at his peer's expense. Thus, the peer has an incentive to promote the inventor's bad project to see him fail, but to denigrate his most promising projects. Moreover, there is an incentive for junior workers to push their own work no matter what the perceived quality is, but an incentive for senior workers to suppress their own ideas in order not to have a big failure that ruins their career. In case of disagreement among agents, the optimal policy is to promote the agent who is more likely to have been truthful, not necessarily the one most suitable for promotion. This policy is not renegotiation proof. Within the class of renegotiation-proof mechanisms, self assessment (where no peer report is submitted) is always optimal. Exaggeration is a less serious problem than denigration in this model. It is risky strategy to exaggerate, since at best you can convince the principal to implement an un-promising project which is likely to fail. It is safer to denigrate, since if a promising project is stopped due to an unfair peer report, the principal will never learn the project's true quality

Suggested Citation

  • Sandeep Baliga & Tomas Sjostrom, 1997. "Not Invented Here," Discussion Papers 1213, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1213
    as

    Download full text from publisher

    File URL: http://www.kellogg.northwestern.edu/research/math/papers/1213.pdf
    File Function: main text
    Download Restriction: no

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Baliga, Sandeep & Sjostrom, Tomas, 2001. "Optimal Design of Peer Review and Self-Assessment Schemes," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 27-51, Spring.

    More about this item

    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:nwu:cmsems:1213. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fran Walker). General contact details of provider: http://edirc.repec.org/data/cmnwuus.html .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.