An experimental test of career concerns

Alexander Koch, Albrecht Morgenstern () and Philippe Raab ()
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Albrecht Morgenstern: Federal Ministry of Finance, Berlin
Philippe Raab: Bonn Graduate School of Economics

No 04/31, Royal Holloway, University of London: Discussion Papers in Economics from Department of Economics, Royal Holloway University of London

Abstract: Holmström’s (1982/99) career concerns model has become an important workhorse for the analysis of agency issues in many fields. The underlying signal jamming argument requires players to use information in a Bayesian way – which may or may not reasonably approximate real-life decision makers’ behavior. Testing this theory with field data is dicult since typically little is known about the information that individuals base their decisions on, and this explains the dearth of empirical studies. We provide experimental evidence that the signal jamming mechanism works in a laboratory setting. Moreover, subjects’ beliefs fit remarkably well requirements imposed by the Bayesian equilibrium concept.

Keywords: incentives; reputation; career concerns; signal jamming; experiments. (search for similar items in EconPapers)
JEL-codes: C91 D83 L14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2004-11, Revised 2004-11
New Economics Papers: this item is included in nep-exp
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Working Paper: An Experimental Test of Career Concerns (2004)
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