Citation

Discussion Paper Details

Please find the details for DP9571 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Building Reputation for Contract Renewal: Implications for Performance Dynamics and Contract Duration

Author(s): Elisabetta Iossa and Patrick Rey

Publication Date: July 2013

Keyword(s): career concerns, career duration, contract renewal, dynamic incentives and reputation

Programme Area(s): Industrial Organization

Abstract: 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.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9571

Bibliographic Reference

Iossa, E and Rey, P. 2013. 'Building Reputation for Contract Renewal: Implications for Performance Dynamics and Contract Duration'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=9571