Experimenting with career concerns

Marina Halac, Ilan Kremer

Research output: Contribution to journalArticlepeer-review

10 Scopus citations

Abstract

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.

Original languageAmerican English
Pages (from-to)260-288
Number of pages29
JournalAmerican Economic Journal: Microeconomics
Volume12
Issue number1
DOIs
StatePublished - 1 Feb 2020

Bibliographical note

Publisher Copyright:
© American Economic Association.

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