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Creator: Camargo, Braz and Pastorino, Elena Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 475 Abstract:
We analyze commitment to employment in an environment in which an infinitely lived firm faces a sequence of finitely lived workers who differ in their ability to produce output. A worker’s ability is initially unknown to both the worker and the firm. A worker’s effort affects the information on ability conveyed by his performance. We characterize equilibria and show that they display commitment to employment only when effort has a persistent but delayed impact on output. In this case, by providing insurance against early termination, commitment to employment encourages workers to exert effort, thus improving the firm’s ability to identify workers’ talent. The incentive value of commitment to retention helps explain the use of probationary appointments in environments in which there is uncertainty about individual ability.
Palavra-chave: Commitment, Learning, Career concerns, and Retention Sujeito: D21 - Firm Behavior: Theory, C73 - Stochastic and Dynamic Games; Evolutionary Games; Repeated Games, D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness, and J41 - Labor Contracts
Creator: Austen-Smith, David. Series: Conference on economics and politics Abstract:
This paper explores the extent and character of interest group influence on legislative policy in a model of decision making under incomplete information. A committee may propose an alternative to a given status quo under closed rule. Policies are related to consequences with ex ante uncertainty. An interest group is able to acquire policy—relevant information at a price, and has access to legislators at both the agenda setting stage and the vote stage. Lobbying is modeled as a game of strategic information transmission. The price of information is itself a private datum to the group, and legislators cannot observe whether the group elects to become informed. If the group is informed, then its information is likewise private. Among the results are: that not all informed lobbyists choose to try and influence the agenda directly; that there can coexist influential lobbying at both stages of the process; and that while informative agenda stage lobbying is genetically influential, the same is not true of voting stage lobbying.
Sujeito: D72 - Analysis of collective decision-making - Models of political processes : Rent-seeking, elections, legislatures, and voting behavior and D83 - Information, knowledge, and uncertainty - Search ; Learning ; Information and knowledge ; Communication ; Belief
Creator: Townsend, Robert M., 1948- Series: Financial history conference Abstract:
ln environments with private information and spatial separation, the ability of agents to establish mutually beneficial arrangements can be limited by their ability to communicate contemporary dealings and histories of past dealings. Indeed, with the extension of some recent work in contract theory and mechanism design, this paper argues that location or person-specific assignment systems, portable object record-keeping systems, written message systems, and telecommunication systems can be viewed as communication systems which are successively more complete in this sense. An attempt is made also to match these various communication systems with systems in use in historical primitive, and/or contemporary societies and to interpret these communication systems as financial structures.
Sujeito: C44 - Operations Research; Statistical Decision Theory, D83 - Information, knowledge, and uncertainty - Search ; Learning ; Information and knowledge ; Communication ; Belief, and D23 - Organizational Behavior; Transaction Costs; Property Rights
Creator: Kiyotaki, Nobuhiro and Wright, Randall D. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 464 Abstract:
The classical and early neoclassical economists knew that the essential function of money was its role as a medium of exchange. Recently, this idea has been formalized using search-theoretic noncooperative equilibrium models of the exchange process. The goal of this paper is to use a simple model of this class to analyze four substantive issues in monetary economics: the interaction between specialization and exchange, dual fiat currency regimes, the welfare improving role of money, and the susceptibility of monetary economies to extrinsic uncertainty.
Palavra-chave: Fiat currency, Exchange, Monetary economics, Fiat money, and Money Sujeito: D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness and E00 - Macroeconomics and Monetary Economics: General
Creator: Smith, Bruce D. (Bruce David), 1954-2002 Series: Working paper (Federal Reserve Bank of Minneapolis. Research Department) Number: 225 Abstract:
A model of a labor market is developed in which agents possess private information about their own productivities. This has the property that firms may use unemployment to create appropriate self-selection incentives. When this is the case, existence of an equilibrium may require that employment be stochastic. This is true even though all uncertainty is necessarily resolved prior to hiring. Even when existence is not at issue, it may be privately as well as socially desirable to randomize employment prospects. Finally, it is argued that this "adverse selection" approach is consistent with traditional "Keynesian" approaches to macroeconomics, but avoids some of the arbitrary features of several "Keynesian models."
Palavra-chave: Randomized employment, Private information, Random employment, and Labor Sujeito: J64 - Unemployment: Models, Duration, Incidence, and Job Search and D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
Creator: Pastorino, Elena Series: Staff report (Federal Reserve Bank of Minneapolis. Research Department) Number: 469 Abstract:
This paper develops and structurally estimates a labor market model that integrates job assignment, learning, and human capital acquisition to account for the main patterns of careers in firms. A key innovation is that the model incorporates workers’ job mobility within and between firms, and the possibility that, through job assignment, firms affect the rate at which they acquire information about workers. The model is estimated using longitudinal administrative data on managers from one U.S. firm in a service industry (the data of Baker, Gibbs, and Holmström (1994a,b)) and fits the data remarkably well. The estimated model is used to assess both the direct effect of learning on wages and its indirect effect through its impact on the dynamics of job assignment. Consistent with the evidence in the literature on comparative advantage and learning, the estimated direct effect of learning on wages is found to be small. Unlike in previous work, by jointly estimating the dynamics of beliefs, jobs, and wages imposing all of the model restrictions, the impact of learning on job assignment can be uncovered and the indirect effect of learning on wages explicitly assessed. The key finding of the paper is that the indirect effect of learning on wages is substantial: overall learning accounts for one quarter of the cumulative wage growth on the job during the first seven years of tenure. Nearly all of the remaining growth is from human capital acquisition. A related novel finding is that the experimentation component of learning is a primary determinant of the timing of promotions and wage increases. Along with persistent uncertainty about ability, experimentation is responsible for substantially compressing wage growth at low tenures.
Palavra-chave: Experimentation, Job Mobility, Bandit, Careers, Wage Growth, and Human Capital Sujeito: J62 - Job, Occupational, and Intergenerational Mobility; Promotion, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, J44 - Professional Labor Markets; Occupational Licensing, D83 - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness, D22 - Firm Behavior: Empirical Analysis, and J31 - Wage Level and Structure; Wage Differentials