Relational Knowledge Transfers

Luis Garicano and Luis Rayo

No 9460, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: An expert must train a novice. The novice initially has no cash, so he can only pay the expert with the accumulated surplus from his production. At any time, the novice can leave the relationship with his acquired knowledge and produce on his own. The sole reason he does not is the prospect of learning in future periods. The profit-maximizing relationship is structured as an apprenticeship, in which all production generated during training is used to compensate the expert. Knowledge transfer takes a simple form. In the first period, the expert gifts the novice a positive level of knowledge, which is independent of the players' discount rate. After that, the novice's total value of knowledge grows at the players' discount rate until all knowledge has been transferred. The inefficiencies that arise from this contract are caused by the expert's artificially slowing down the rate of knowledge transfer rather than by her reducing the total amount of knowledge eventually transferred. We show that these inefficiencies are larger the more patient the players are. Finally, we study the impact of knowledge externalities across players.

Keywords: General human capital; Knowledge; Relational contracts; Skills (search for similar items in EconPapers)
JEL-codes: C73 J24 L14 (search for similar items in EconPapers)
Date: 2013-05
New Economics Papers: this item is included in nep-cse, nep-gth, nep-hrm, nep-knm and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP9460 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Relational Knowledge Transfers (2017)
Working Paper: Relational knowledge transfers (2017)
Working Paper: Relational knowledge transfers (2016)
Working Paper: Relational Knowledge Transfers (2016)
Working Paper: Relational knowledge transfers (2016)
Working Paper: Relational Knowledge Transfers (2013)
Working Paper: Relational knowledge transfers (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9460

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9460

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().