Belief Precision and Effort Incentives in Promotion Contests

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningfagfællebedømt

The career concerns literature predicts that incentives for effort decline as beliefs about ability become more precise (Holmström, 1982, 1999). In contrast, we show that effort can increase with belief precision when agents compete for promotions to better paid jobs that are assigned on the basis of perceived abilities. In this case, an intermediate level of precision provides the strongest incentive for effort, with effort increasing (decreasing) when beliefs are less (more) precise.

OriginalsprogEngelsk
TidsskriftEconomic Journal
Vol/bind125
Udgave nummer589
Sider (fra-til)1952-1963
Antal sider12
ISSN0013-0133
DOI
StatusUdgivet - 1 dec. 2015

ID: 216919021