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Performance Cycles

Author

Listed:
  • David Lagziel

    (BGU)

  • Ehud Lehrer

    (TAU)

Abstract

A decision maker repeatedly exerts efforts to produce new outputs, while being compensated based on his past and current production levels. We show that the decision maker’s optimal strategy dictates a cyclic oscillatory performance whenever the compensation depends on recent past performance. We apply our model to various economic settings such as the delegated portfolio-managers problem, an R &D investment problem, and a dynamic advertising problem.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • David Lagziel & Ehud Lehrer, 2018. "Performance Cycles," Working Papers 1809, Ben-Gurion University of the Negev, Department of Economics.
    • Handle: RePEc:bgu:wpaper:1809
    as

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    File URL: http://in.bgu.ac.il/en/humsos/Econ/Workingpapers/1809.pdf
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    Other versions of this item:

    • David Lagziel & Ehud Lehrer, 2024. "Performance cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 77(4), pages 999-1024, June.

    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Reputation; Performance cycles; Performance persistence; Dynamic Optimization;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

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