Evaluation and Assignment with Networked Competition and Spillovers

Antonio Cabrales and Wenhao Cheng

No 12816, CESifo Working Paper Series from CESifo

Abstract: This paper studies how organizations should jointly design evaluation rules and assign workers when performance depends on both effort and non-discretionary advantage. Agents choose effort in positions linked by a competition network, while their effective advantage depends on own type and spillovers through a second network. The planner chooses both the assignment and the effort weight in evaluation. Equilibrium effort rises with a position's Katz-Bonacich centrality and falls with effective advantage. The optimal evaluation rule generally differs from true output. When effort is more important in production, the planner lowers the effort weight and uses negative assortative assignment to strengthen incentives. When advantage is more important, the planner raises the effort weight and uses positive assortative assignment to exploit spillovers. We also study a constraint requiring assignments to be pairwise stable, which creates an output loss depending on the intensity of competition.

Keywords: relative performance evaluation, worker assignment, organizational design, incentives; contests, network games, peer effects, spillovers, assortative matching (search for similar items in EconPapers)
JEL-codes: C72 D23 D85 J33 M52 (search for similar items in EconPapers)
Date: 2026
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