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Performance Sampling and Bimodal Duration Dependence

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  • Jerker Denrell
  • Zur Shapira

Abstract

Performance sampling models of duration dependence in employee turnover and firm exit predict that hazard rates will initially be low, gradually rise to a maximum, and then fall. As we note in this paper, however, several empirical duration distributions have bimodal hazard rates. This paper shows that such bimodal hazard rates can be derived from existing models of performance sampling by small changes in the assumptions. In particular, bimodal hazard rates emerge if the mean or the variance of performances changes over time, which would occur if employees or firms face more challenging tasks over time. Using data on turnover in law firms, we show that the hazard rate predicted by these models fit data better than existing models.

Suggested Citation

  • Jerker Denrell & Zur Shapira, 2006. "Performance Sampling and Bimodal Duration Dependence," Discussion Paper Series dp431, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
    • Handle: RePEc:huj:dispap:dp431
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    References listed on IDEAS

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    More about this item

    Keywords

    Duration Dependence; Performance Sampling; Turnover;
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