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Article
Reputation, Career Concerns, and Job Assignments
The B.E. Journal of Theoretical Economics (2009)
  • Leonardo Martinez, Federal Reserve Bank of Richmond
Abstract

This paper presents a tractable model that allows us to study career concerns when the strength of a worker's incentives depends on his employment history. More specifically, the paper incorporates standard job assignments into the main model in Holmstrom (1999). Equilibrium wages, equilibrium job assignments, and the strength of career-concern incentives are the same for all employment histories that lead to the same worker's reputation. (With reputation we refer to beliefs about the worker's future productivity.) We show that, typically, workers with better reputation have stronger incentives than workers with worse reputation. Furthermore, we show that when the strength of incentives depends on employment history, (i) a ratchet effect may appear, (ii) in spite of this ratchet effect, incentives may be stronger, and (iii) incentives may be stronger when beliefs about ability are more precise.

Keywords
  • career concerns,
  • job assignments,
  • reputation,
  • agency,
  • learning,
  • dynamic games
Publication Date
2009
Citation Information
Leonardo Martinez. "Reputation, Career Concerns, and Job Assignments" The B.E. Journal of Theoretical Economics Vol. 9 Iss. 1 (2009)
Available at: http://works.bepress.com/leonardo_martinez/1/