Document Type
Discussion Paper
Publication Date
10-1-2011
CFDP Number
1831
CFDP Revision Date
2012-01-01
CFDP Pages
93
Abstract
This paper develops a model of career concerns. The worker’s skill is revealed through output, wage is based on expected output, and so on assessed ability. Specifically, effort increases the probability that a skilled worker achieves a one-time breakthrough. Effort levels at different times are strategic substitutes. Equilibrium effort (and, if marginal cost is convex, wage) is single-peaked with seniority. The agent works too little, too late. Both delay and underprovision of effort worsen if effort is observable. If the firm commits to wages but faces competition, the optimal contract features piecewise constant wages as well as severance pay.
Recommended Citation
Bonatti, Alessandro and Hörner, Johannes, "Career Concerns with Coarse Information" (2011). Cowles Foundation Discussion Papers. 2187.
https://elischolar.library.yale.edu/cowles-discussion-paper-series/2187