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Unpublished Paper
Collective vs. Relative Performance Evaluation with Career Concerns
Working Paper (2024)
  • Huseyin Yildirim
Abstract
Contract theory generally prescribes Relative Performance Evaluation (RPE) to filter out similar uncertainties and induce competition among agents. This paper argues that the RPE logic fails when agents are implicitly motivated by career concerns, such as the prospect of future employment and promotions based on perceived talents. This is because RPE can also filter out agents' similar talents they aim to demonstrate. Collective Performance Evaluation can motivate career-concerned agents better by positively tying their reputations. The paper characterizes the optimal performance evaluations and how they vary with agents' prior reputations. The findings can explain the RPE ban in government agencies.
Keywords
  • Career concerns,
  • performance ratings,
  • relative performance evaluation,
  • collective performance evaluation
Disciplines
Publication Date
July 25, 2024
Citation Information
Huseyin Yildirim. "Collective vs. Relative Performance Evaluation with Career Concerns" Working Paper (2024)
Available at: http://works.bepress.com/huseyin_yildirim/40/