An Experimental Study of Career Concerns in Groups
36 Pages Posted: 9 Nov 2022
Date Written: October 31, 2022
This paper studies career concerns in groups where workers can allocate effort between their own tasks and other group members' tasks. We first theoretically investigate how workers allocate effort when they have career concerns. Then, we study their decisions when the labor market can only observe their aggregate performance rather than their individual performance. Consistent with theoretical predictions, our experimental results show that workers tend to allocate more effort to their own tasks when they have career concerns. Additionally, workers are more likely to support others when their aggregate performance is observed by the labor market. We also observe a number of inconsistencies between the data and theoretical predictions. For example, workers allocate more effort to support others in the experiment than that in theory. We apply the quantal response equilibrium (QRE) to explain these deviations.
Keywords: Career Concerns in Groups, Trade-offs, Group Performance, Laboratory Experiment, Quantal Response Equilibrium
JEL Classification: C70, C9, D22, D41, D70, D82, J30, M50
Suggested Citation: Suggested Citation