An Experimental Study of Career Concerns in Groups

Abstract

This paper studies career concerns in groups where agents can allocate effort between their own tasks and other group members' tasks. We first theoretically investigate how agents allocate effort when they have career concerns. Then, we compare their decisions in a scenario where firms in the labor market can observe their individual performance and in another scenario where only the aggregate performance is observed. Consistent with theoretical predictions, our experimental results show that agents tend to allocate more effort to their own tasks when they have career concerns. Additionally, aggregate performance is higher when the labor market observes each agent's individual performance. However, agents are more likely to support other group members when their aggregate performance is observed by the labor market. We discuss the implications of these results for different organizations.

Keywords: Career Concerns in Groups, Trade-offs, Group Performance, Laboratory Experiment, Quantal Response Equilibrium

JEL Classification: C70, C9, D22, D41, D70, D82, J30, M50