Experimenting with Career Concerns
- American Economic Journal: Microeconomics (Forthcoming)
A manager who learns privately about a project over time may want to
delay quitting it if recognizing failure/lack of success hurts his reputation.
In the banking industry, managers may want to roll over bad loans. How
do distortions depend on expected project quality? What are the effects
of releasing public information about quality? A key feature of banks
is that they learn about project quality from bad news, i.e. a default.
We show that in such an environment, distortions tend to increase with
expected quality and imperfect information about quality. Results differ
if managers instead learn from good news.
Forthcoming Article Downloads