Career Concerns and Belief Precision about Talent

Frédéric Loss and Antoine Renucci

Annals of Economics and Statistics, 2020, issue 139, 87-104

Abstract: In this paper, we study effort incentives in the labor market when talent is learned over time. We build a career concerns model in which agents can be promoted. We show that effort can increase in the precision of beliefs about talent, unlike the result obtained in the seminal paper of Holmström (1999), but in line with Miklós-Thal and Ullrich (2015). Characterizing the impact of belief precision on incentives through the wage function allows us to identify a “front-runner” effect. Agents who will be promoted if they keep their reputation are more likely than others to exert more effort when belief precision is higher. This is in contrast to Miklós-Thal and Ullrich (2015) who find a symmetric relation around the threshold for being promoted.

Keywords: Promotion; Incentives; Reputation; Career Concerns; Belief Precision; Talent (search for similar items in EconPapers)
JEL-codes: D83 L14 M51 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2020:i:139:p:87-104

DOI: 10.15609/annaeconstat2009.139.0087

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