Dynamic Evaluation Design

B-Tier
Journal: American Economic Journal: Microeconomics
Year: 2021
Volume: 13
Issue: 4
Pages: 300-331

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

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

Abstract

A principal owns a firm, hires an agent of uncertain productivity, and designs a dynamic policy for evaluating his performance. The agent observes ongoing evaluations and decides when to quit. When not quitting, the agent is paid a wage that is linear in his expected productivity; the principal claims the residual performance. After quitting, the players secure fixed outside options. I show that equilibrium is Pareto efficient. For a broad class of performance technologies, the equilibrium wage deterministically grows with tenure. My analysis suggests that endogenous performance evaluation plays an important role in shaping careers in organizations.

Technical Details

RePEc Handle
repec:aea:aejmic:v:13:y:2021:i:4:p:300-331
Journal Field
General
Author Count
1
Added to Database
2026-01-29