Dynamic Evaluation Design
Keyword(s):
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. (JEL D21, D82, D83, J24, J31, J41, M51)
2017 ◽
Vol 22
(11)
◽
pp. 04017091
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2011 ◽
Vol 67
(2)
◽
pp. I_661-I_666
Keyword(s):
2021 ◽
2014 ◽
Vol 675-677
◽
pp. 1777-1780
1980 ◽
Vol 38
◽
pp. 350-351