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Article
Belief Precision and Effort Incentives in Promotion Contests
Economic Journal (2015)
  • Jeanine Miklos-Thal, University of Rochester
  • Hannes Ullrich, University of Zurich
Abstract
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 if promotions to better-paid jobs make the returns to reputation non-linear. In this case, an intermediate level of precision provides the strongest incentive for effort, with effort increasing (decreasing) when beliefs are less (more) precise.
Keywords
  • incentives,
  • reputation,
  • promotion contests,
  • career concerns
Disciplines
Publication Date
December, 2015
Citation Information
Jeanine Miklos-Thal and Hannes Ullrich. "Belief Precision and Effort Incentives in Promotion Contests" Economic Journal Vol. 125 Iss. 589 (2015) p. 1952 - 1963
Available at: http://works.bepress.com/jmiklosthal/11/