Transparency, Career Concerns, and Incentives for Acquiring Expertise
Heski Bar-Isaac ()
The B.E. Journal of Theoretical Economics, 2012, vol. 12, issue 1, 1-15
An agent, who cares about signaling his ability, chooses among different projects that generate observable outcomes. The agent's information about which project delivers a good outcome depends on both his ability and his effort. This paper examines how the agent's incentives for effort change depending on whether or not the agent's project choice is observed. If this choice is publicly observed, the agent's project choice is distorted towards particular types of projects. When the outcomes of these advantaged projects are particularly sensitive to the agent's information, such transparency boosts the agent's information-gathering incentives. However, when public observation of project choice leads the agent to choose information-insensitive projects, then such transparency dampens incentives. This provides a more nuanced view of the implications of action transparency in the literature on career concerns for experts.
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