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Relational knowledge transfers

Luis Garicano () and Luis Rayo

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: An expert with general knowledge trains a cash-constrained novice. Faster training increases the novice's productivity and his ability to compensate the expert; it also shrinks the stock of knowledge yet to be transferred, reducing the expert's ability to retain the novice. The profit-maximizing agreement is a multi-period apprenticeship in which knowledge is transferred gradually over time. The expert adopts a " 1/e rule" whereby, at the beginning of the relationship, the novice is trained just enough to produce a fraction 1/e of the efficient output. This rule causes inefficiently lengthy relationships that grow longer the more patient the players. We discuss policy interventions.

Keywords: general human capital; international joint ventures; relational contracts (search for similar items in EconPapers)
Date: 2016-03-08
New Economics Papers: this item is included in nep-mic
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https://cep.lse.ac.uk/pubs/download/dp1412.pdf (application/pdf)

Related works:
Journal Article: Relational Knowledge Transfers (2017) Downloads
Working Paper: Relational knowledge transfers (2017) Downloads
Working Paper: Relational Knowledge Transfers (2016) Downloads
Working Paper: Relational knowledge transfers (2016) Downloads
Working Paper: Relational Knowledge Transfers (2013) Downloads
Working Paper: Relational Knowledge Transfers (2013) Downloads
Working Paper: Relational knowledge transfers (2013) Downloads
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