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Career Concerns in Competitive Executive Job Markets

In: Contract Theory: Discrete- and Continuous-Time Models

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  • Jaeyoung Sung

    (Ajou University)

Abstract

We apply results from the incomplete information model of the last chapter in order to examine the effects of managerial career concerns on the current contract. The agent with career concerns makes his private effort decisions based on the aggregate incentive which is the sum of explicit incentives from the current contract and implicit incentives from his future career opportunities. It will be seen that under the optimal contract, the presence of career concerns affects neither the sum nor the agent’s work incentives. If they are all identical except that young people have longer periods of career concerns than old people do, then their aggregate incentives are the same across all people, and as a result, current contracts for young people provide lower-powered explicit incentives than those for old people do.

Suggested Citation

  • Jaeyoung Sung, 2023. "Career Concerns in Competitive Executive Job Markets," Springer Books, in: Contract Theory: Discrete- and Continuous-Time Models, chapter 0, pages 123-132, Springer.
    • Handle: RePEc:spr:sprchp:978-981-99-5487-2_8
    DOI: 10.1007/978-981-99-5487-2_8
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