Something to Prove: Reputation in Teams and Hiring to Introduce Uncertainty

46 Pages Posted: 13 Oct 2008

See all articles by Heski Bar-Isaac

Heski Bar-Isaac

University of Toronto - Rotman School of Management

Date Written: April 2004

Abstract

Agents work for their own reputations when young but for their firms when old. An individual with an established reputation cannot credibly commit to exerting effort when working alone. However, by hiring and working with juniors of uncertain reputation, seniors will have incentives to exert effort. Incentives for young agents arise from a concern for their own reputation (and the opportunity to take over the firm) but older agents work for the reputation of their firms (and the opportunity to sell out to juniors). An important theoretical contribution is an example of a mechanism that endogenously introduces type uncertainty.

Keywords: Reputation incentive, teams, overlapping generations, up-or-out

Suggested Citation

Bar-Isaac, Heski, Something to Prove: Reputation in Teams and Hiring to Introduce Uncertainty (April 2004). NYU Working Paper No. 2451/26120, Available at SSRN: https://ssrn.com/abstract=1282550

Heski Bar-Isaac (Contact Author)

University of Toronto - Rotman School of Management ( email )

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