Motivational Ratings

Abstract

Performance evaluation (\rating") systems not only provide information to users but also motivate the rated worker. This paper solves for the optimal (effort-maximizing) rating within the standard career concerns framework. We prove that this rating is a linear function of past observations. The rating, however, is not a Markov process, but rather the sum of two Markov processes. We show how it combines information of different types and vintages. An increase in effort may adversely affect some (but not all) future ratings.

Keywords

Replaced by

Johannes Hörner, and Nicolas Lambert, “Motivational Ratings”, The Review of Economic Studies, vol. 88, July 2021, pp. 1892–1935.

Reference

Johannes Hörner, and Nicolas Lambert, “Motivational Ratings”, TSE Working Paper, n. 20-1134, August 2020.