Subjective Evaluations with Performance Feedback

60 Pages Posted: 18 Jan 2014

See all articles by Jan Zabojnik

Jan Zabojnik

Queen's University - Department of Economics

Date Written: November 8, 2013

Abstract

Firms use subjective performance evaluations to provide employees with both incentives and feedback. This article shows that if an objective measure of performance, however imperfect, is available, subjective evaluations with incentive effects can be sustained even without repeated interaction. Although full efficiency cannot be achieved in general, it is achievable if the fi…rm can commit to a forced distribution of evaluations and employs a continuum of workers. When the number of workers is small, a forced distribution is useful only if the objective measure is poor. The model also shows that a leniency bias in evaluations can improve incentives.

Keywords: Subjective Evaluations, Performance Feedback, Optimal Incentive Contracts

JEL Classification: D82, D86, M52

Suggested Citation

Zabojnik, Jan, Subjective Evaluations with Performance Feedback (November 8, 2013). RAND Journal of Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2380138

Jan Zabojnik (Contact Author)

Queen's University - Department of Economics ( email )

94 University Avenue
Kingston, Ontario K7L 3N6
Canada
613-533-2275 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://qed.econ.queensu.ca/faculty/zabojnik/Page/

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