Adversarial Career Concerns: Theory of Uneven Learning about Ability and Evidence from Lawyers’ Trajectories

Rosa Ferrer and Danisz Okulicz

No 19854, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Adversarial win--loss outcomes imply jointly determined performance, such that individual performance cannot be fully disentangled (e.g., opposing lawyers’ court performance). This paper develops a theoretical framework and presents empirical evidence on the career-concern incentives and market learning generated by such environments. A central feature of adversarial settings is that the informativeness of performance is endogenous to the confrontation itself. Regardless of the functional form of the outcome, implicit incentives depend on the degree of symmetry between opponents. Incentives weaken in more balanced settings because outcomes become less informative about talent, increasing the likelihood that noise determines the winner. In equilibrium, uneven learning generates asymmetric reputational rewards, affecting relative effort incentives and potentially increasing aggregate effort. Empirically, we use panel data on young lawyers to study career trajectories consistent with substantial implicit incentives, particularly early in lawyers’ careers. We exploit institutional features generating asymmetric career concerns between opposing parties in personal injury litigation, a setting in which attorneys typically specialize on either the plaintiff or defense side. Consistent with stronger reputational rewards from observable performance on the plaintiff side, plaintiff lawyers exhibit greater earnings dispersion, a stronger association between performance and career outcomes, and stronger early-career effort incentives. More broadly, the paper bridges two previously separate strands of research—employer learning and career concerns—by showing how dispersion in residual earnings growth is associated with early-career effort choices.

JEL-codes: D80 J24 J44 K41 L14 (search for similar items in EconPapers)
Date: 2025-01
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