Communicating subjective evaluations

A-Tier
Journal: Journal of Economic Theory
Year: 2019
Volume: 179
Issue: C
Pages: 163-199

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Consider managers evaluating their employees' performances. Should managers justify their subjective evaluations? Suppose a manager's evaluation is private information. Justifying her evaluation is costly but limits the principal's scope for distorting her evaluation of the employee. I show that the manager justifies her evaluation if and only if the employee's performance was poor. The justification assures the employee that the manager has not distorted the evaluation downwards. For good performance, however, the manager pays a constant high wage without justification. The empirical literature demonstrates that subjective evaluations are lenient and discriminate poorly between good performance levels. This pattern was attributed to biased managers. I show that these effects can occur in optimal contracts without any biased behavior.

Technical Details

RePEc Handle
repec:eee:jetheo:v:179:y:2019:i:c:p:163-199
Journal Field
Theory
Author Count
1
Added to Database
2026-01-25