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Cited by 3,172Labor market dynamics and wage inequalityExperimental Behavioral Economics StudiesAccounting and Organizational Management

The DOI matches its Crossref record; 22 of the 22 references it cites were found in a registry or an index.

Managerial Incentive Problems: A Dynamic Perspective

Open access
Holmstrom, Bengt·1999·Review of Economic Studies
DOI 10.1111/1467-937x.00083
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Abstract

The paper studies how a person's concern for a future career may influence his or her incentives to put in effort or make decisions on the job. In the model, the person's productive abilities are revealed over time through observations of performance. There are no explicit output-contingent contracts, but since the wage in each period is based on expected output and expected output depends on assessed ability, an "implicit contract" links today's performance to future wages. An incentive problem arises from the person's ability and desire to influence the learning process, and therefore the wage process, by taking unobserved actions that affect today's performance. The fundamental incongruity in preferences is between the individual's concern for human capital returns and the firm's concern for financial returns. The two need be only weakly related. It is shown that career motives can be beneficial as well as detrimental, depending on how well the two kinds of capital returns are aligned.

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Citations

Cites

Show all 22 references

Research works printed but not linked: 3

  1. Ross, Stephen (1977): \The Determination of Financial Structure: The Incentive Signaling Approach," The Bell Journal of Economics, V ol. 8, No. 1, pp. 23-40.
  2. Fudenberg, Drew; Tirole, Jean (1986): \A `Signal-Jamming' Theory of Predation," Rand Journal of Economics, V ol. 17, No. 3, pp. 366-76.
  3. Milgrom, Paul; Roberts, John (1988): \An Economic Approach to In uence Activities," American Journal of Sociology, V ol. 94, Supplement, pp. 154-79.

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Metadata

Authors
Holmstrom, B.
Affiliations
National Bureau of Economic Research (US)
Corresponding author
Holmstrom, Bengt
Venue
Review of Economic Studies
Publisher
Oxford University Press (OUP)
Published
1999-01
Volume
66
Issue
1
Pages
169-182
ISSN
  • 0034-6527 (ISSN-L)
  • 1467-937X
DOI
10.1111/1467-937x.00083
OpenAlex
W2108548811
Cited by
3,172
References
22
Citations by year
2026: 123 · 2025: 161 · 2024: 127 · 2023: 152 · 2022: 103 · 2021: 128 · 2020: 133 · 2019: 121 · 2018: 130 · 2017: 149 · 2016: 136 · 2015: 135 · 2014: 148 · 2013: 144 · 2012: 140
FWCI
146.58
Type
journal article
Language
en
Open access
Locations
  • The Review of Economic Studies (publishedVersion)
  • National Bureau of Economic Research (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • SSRN Electronic Journal (submittedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Experimental Behavioral Economics Studies
  • Social Sciences › Business, Management and Accounting › Accounting › Accounting and Organizational Management
Keywords
managerial incentives, career concerns, human capital, effort incentives, performance-based pay, implicit contracts, ability assessment, wage contracts

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