BUILDING REPUTATION FOR CONTRACT RENEWAL: IMPLICATIONS FOR PERFORMANCE DYNAMICS AND CONTRACT DURATION

• 成果类型: Article
• 署名作者: Iossa, Elisabetta; Rey, Patrick
• 署名单位: University of Rome Tor Vergata; Universite de Toulouse; Universite Toulouse 1 Capitole; Toulouse School of Economics; Center for Economic & Policy Research (CEPR)
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1111/jeea.12075
• 发表日期: 2014
• 页码: 549-574
• 关键词: long-term-contracts; COMPETITION; incentives; GOVERNMENT; cost; pay

摘要

We study how career concerns affect the dynamics of incentives in a multi-period contract, when the agent's productivity is a stochastic function of his past productivity and investment. We show that incentives are stronger and performance is higher when the contract approaches its expiry date. Contrary to common wisdom, long-term contracts may strengthen reputational effects whereas short-term contracting may be optimal when investment has persistent, long-term effects.