Year: 2006
Type: article
Abstract: We study optimal incentive contracts when commitments are limited, and agents have multiple tasks and career concerns. The agent's career concerns are determined by the outside market. We show that the principal might want to give the strongest explicit incentives to agents far from retirement to account for the fact that career concerns might induce behavior in conflict with the principal's preferences. Furthermore, we show that maximized welfare might be decreasing in the strength of career concerns, that optimal incentives can be positively correlated with various measures of uncertainty, and that career incentives have strong implications for optimal job design.
Authors: Oddvar M. Kaarbøe, Trond E. Olsen
Institutions: University of Bergen, Norwegian School of Economics
Language: English
Field: Decision Sciences
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W2022216293