Motivational Ratings

Johannes Hörner and Nicolas Lambert

No 2035, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

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.

Keywords: Career Concerns; Mechanism Design; Ratings (search for similar items in EconPapers)
JEL-codes: C72 C73 (search for similar items in EconPapers)
Pages: 102 pages
Date: 2016-04
New Economics Papers: this item is included in nep-gth, nep-hrm, nep-mic and nep-pke
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Motivational Ratings (2021)
Working Paper: Motivational Ratings (2021)
Working Paper: Motivational Ratings (2021)
Working Paper: Motivational Ratings (2020)
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