Quarterly Personnel Update-- 2023_03
Peter Kuhn
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The Principal-Agent Model
5.5: Multi-task Principal-Agent Interactions
Strauss, Valerie. 2015 How and why convicted Atlanta teachers cheated on standardized tests Washington Post, April 1. (accessed March 14, 2023)
Attributes the cheating to “increasingly high stakes on standardized test score” associated with No Child Left Behind, President George W. Bush’s chief education initiative, and then Race to the Top, President Obama’s central education program. “Such testing mandates were coupled with a ‘no excuse’ management push by school reformers who said teachers had, well, no excuse not to raise their students’ test scores.”
de Janvry, Alain, Guojun He, Elisabeth Sadoulet, Shaoda Wang and Qiong Zhang 2023 Subjective Performance Evaluation, Influence Activities, and Bureaucratic Work Behavior: Evidence from China American Economic Review 2023, 113(3): 766–799
Subjective performance evaluation could induce influence activities: employees might devote too much effort to pleasing their evaluator, relative to working toward the goals of the organization. Using a randomized field experiment among Chinese local civil servants, the authors find that civil servants do engage in influence activities by reallocating work efforts toward job tasks that are more important and observable to the evaluator. Introducing uncertainty about the evaluator’s identity reduces these activities.
6. Optimal Monitoring
Yanutelli, Silvia. 2023. From Lapdogs to Watchdogs: Random Auditor Assignment and Municipal Fiscal Performance. NBER Working paper no. 30644
While monitoring can mitigate agency problems, it can become rendered ineffective if auditors are corruptible. The author studies an Italian reform that removed the local governments’ abilities to choose their own auditors, replacing it by introduced a random assignment mechanism. She finds that treated municipalities significantly improve their net surpluses and debt repayments; these effects are a combination of selection, matching and incentive effects.
Evidence on Employee Motivation
10.1-10.3: Gift Exchange and Reciprocity
Fahn, Matthias. 2023 Reciprocity in Dynamic Employment Relationships Management Science, forthcoming.
This paper analyzes a dynamic relational contract for employees with reciprocal preferences. In the author’s model, generous upfront wages activate the norm of reciprocity and become most important when an employee is close to retirement. In earlier stages, direct financial incentives are more effective. Hence, direct and reciprocity-based incentives reinforce each other.
Selection
15: Choosing from the Pool: Testing, Discretion, and Self-Selection
Van Inwegen, Emma, Zanele T. Munyikwa, and John J. Horton 2023 Algorithmic
Writing Assistance on Jobseekers’ Resumes Increases Hires NBER working paper no #30886
In a field experiment nearly half a million jobseekers, the authors show that algorithmic writing assistance increased the probability of getting hired by 8 percent. Contrary to concerns that the assistance takes away a valuable signal, they find no evidence that employers were less satisfied. The authors explain this result by arguing that better writing is not a signal of ability but helps employers ascertain ability.
17: Setting Pay: Monopsony Models
Mark, Julian. 2023 Noncompete clauses are everywhere, even for dancers and hair stylists. Washington Post, March 10, 2023 (visited March 14, 2023.
As regulators take aim at noncompete agreements, people in five states talk about how they’ve been hampered in their attempts to change employers
19: Training
Adhvaryu, Achyuta, Namrata Kala, and Anant Nyshadham 2023 Returns to On-The-Job Soft Skills Training Journal of Political Economy, forthcoming.
While employers frequently mention the importance of ‘soft skills’, measuring their causal effect on productivity has been difficult. The authors use a field experiment in Indian garment factories to measure the effects of a program called Personal Advancement and Career Enhancement (P.A.C.E.), which provides training in life skills such as communication, time management, problem solving and decision-making, and effective teamwork. The authors find productivity gains of 13.5 percent from the program.
Tournaments
22.4: Ability Differences in Multistage Contests and Promotion Ladders
Teeselink, Bouke Klein , Martijn J. van den Assem, and Dennie van Dolder 2023 Does Losing Lead to Winning? An Empirical Analysis for Four Sports Management Science, Vol. 69, No. 1: 513-532
The authors replicate Berger and Pope’s (2011) well known study, which found that being slightly behind increases the likelihood of winning in professional and collegiate basketball. Conducting similar analyses on large samples of Australian football, American football, and rugby matches, they find no evidence of such an effect for these three sports. Revising Berger and Pope’s basketball findings for other time periods and for Women’s Basketball, they also find no significant effects.
23.1: Ability, Risk Aversion and Tournament Entry
Laferrière, Vincent, David Staubli, and Christian Thöni 2022 Explaining Excess Entry in Winner-Take-All Markets. Management Science, Vol. 69, No. 2: 1050-1069.
We report experimental data from standard market entry games and winner-take-all games. At odds with traditional decision-making models with risk aversion, the winner-take-all condition results in substantially more entry than the expected-payoff-equivalent market entry game. We explore three candidate explanations for excess entry: blind spot, illusion of control, and joy of winning, none of which receive empirical support. Instead, the authors argue that excess entry into highly competitive environments is not caused by a preference for competition, but by probability weighting: Market entrants overweight the small probabilities associated with the high payoff outcomes in winner-take-all markets, while they underweight probable failures.
Teams
25.b Identity and Team Performance
Ai, Wei, Yan Chen, Qiaozhu Mei, Jieping Ye,
and Lingyu Zhang 2023 Putting Teams into the Gig Economy: A Field Experiment
at a Ride-Sharing Platform Management Science, forthcoming.
Many gig workers work in relative isolation, which might limit their identification with the company and co-workers, thus raising turnover. To explore this issue, the authors developed a team formation and interteam contest field experiment at a ride-sharing platform. When these teams compete for cash prizes, we find that (1) treated drivers work longer hours and earn 12% higher revenue and (2) higher productivity persists two weeks after the contest. This suggests that platform designers can leverage team identity and team contests to increase revenue and worker engagement in a gig economy.
26.3.a Do Managers Matter? Evidence on Leadership
Soledad Giardili, Kamalini Ramdas, and Jonathan W. Williams 2023. “Leadership and Productivity: A Study of U.S. Automobile Assembly Plants” Management Science, Vol. 69, No. 3: 1500-1517.
The authors study the effect of plant managers on productivity in U.S. auto-assembly plants during 1993–2007. They find that ‘managers matter’: the interquartile range of the effect of individual plant managers on average hours-per-vehicle is about 30%. That said, there is strong evidence that managers can learn from experience, with a particular car model or assembly plant.
Thanks for your attention!
Note: The article descriptions in these updates are not copies of the authors’ abstracts. While they may use text from those abstracts (and/or the article), they are my own summaries that (a) endeavor to be shorter than most abstracts, and (b) attempt to place the article in the broader context of personnel economics as a field. I hope that you will find them helpful.