TY - JOUR
T1 - Experimenting with career concerns
AU - Halac, Marina
AU - Kremer, Ilan
N1 - Publisher Copyright:
© American Economic Association.
PY - 2020/2/1
Y1 - 2020/2/1
N2 - 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 managers 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.
AB - 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 managers 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.
UR - http://www.scopus.com/inward/record.url?scp=85079772750&partnerID=8YFLogxK
U2 - 10.1257/mic.20170411
DO - 10.1257/mic.20170411
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AN - SCOPUS:85079772750
SN - 1945-7669
VL - 12
SP - 260
EP - 288
JO - American Economic Journal: Microeconomics
JF - American Economic Journal: Microeconomics
IS - 1
ER -