Motivational Ratings

Economics

Speaker:Johannes Hörner, Toulouse School of Economics
Date: Friday 2 March 2018
Time: 3.30pm
Location: Kolade Teaching Room, Building One

Further details

Performance evaluation (“rating”) systems not only provide information to users but also motivate the rated worker. This paper solves for the optimal (effort-maximizing) system within the standard career concerns framework. It is a mixture two-state Markov system. That is, it is the sum of two Markov processes, with one that reflects the belief of the rater and the other the preferences of the worker. The rating, however, is not a Markov process. Our analysis shows how the rating combines information of different types and vintages. In particular,an increase in effort may adversely affect some (but not all) future ratings.