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Rat Races and Glass Ceilings

  • Peter Bardsley and Katerina Sherstyuk
Published/Copyright: November 1, 2006
Topics in Theoretical Economics
From the journal Topics in Theoretical Economics Volume 6 Issue 1

In an ongoing organization, such as a large law partnership firm, employees are motivated not only by current rewards but also by the prospect of promotion, and the opportunity to make the rules in the future. This leads to a recursive contract design problem in an overlapping generations environment, where current agents may become future principals. The principal offers, and promotion-motivated agents accept, harsh rat race contracts with low wages and high effort levels. Hiring and promotion probabilities emerge as the preferred instrument to screen high cost workers, who face employment barriers and a glass ceiling.

Keywords: recursive contracts; mechanism design; overlapping generations; adverse selection
Published Online: 2006-11-1

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https://doi.org/10.2202/1534-598X.1297
Keywords for this article
recursive contracts; mechanism design; overlapping generations; adverse selection

Articles in the same Issue

  1. Advances Article
  2. Evolutionary Dynamics and Long-Run Selection
  3. Party Competition under Private and Public Financing: A Comparison of Institutions
  4. Limited Observation in Mutual Consent Networks
  5. Status Concerns and Occupational Choice Under Uncertainty
  6. Choice under Limited Uncertainty
  7. A Vague Theory of Choice over Time
  8. Strategic Implications of Uncertainty over One's Own Private Value in Auctions
  9. Contributions Article
  10. Snobs and Quality Gaps
  11. General Option Exercise Rules, with Applications to Embedded Options and Monopolistic Expansion
  12. Liars and Inspectors: Optimal Financial Contracts When Monitoring is Non-Observable
  13. Inefficiency in a Bilateral Trading Problem with Cooperative Investment
  14. A Spatial Election with Common Values
  15. Is Sustainable Development Compatible with Rawlsian Justice?
  16. Multiple Lending and Constrained Efficiency in the Credit Market
  17. The Uniqueness of Stable Matchings
  18. Assessing the Likelihood of Panic-Based Bank Runs
  19. Are Manufacturers Competing through or with Supermarkets? A Theoretical Investigation
  20. Existence of Equilibrium for Segmented Markets Models with Interest Rate Monetary Policies
  21. Affiliated Common Value Auctions with Differential Information: The Two Bidder Case
  22. The Emergence of a Price System from Decentralized Bilateral Exchange
  23. Finite Memory Distributed Systems
  24. Topics Article
  25. Special Interest Politics and Endogenous Lobby Formation
  26. Robust Portfolio Selection with and without Relative Entropy
  27. Increased Risk-Bearing with Background Risk
  28. Resources as an Input of Production in a Two-Sector Economy
  29. Why the Reserve Price Should Not Be Kept Secret
  30. A Strategic Analysis of Terrorist Activity and Counter-Terrorism Policies
  31. The Role of Observability in Futures Markets
  32. An Amendment to Baumol's Burden Test
  33. Pareto Improving Lotteries and Voluntary Public Goods Provision
  34. Endogenous Favoritism in Organizations
  35. Age Bias in Fiscal Policy: Why Does the Political Process Favor the Elderly?
  36. Fundamental and Secondary R&D Races
  37. Rat Races and Glass Ceilings
  38. On the Number of Contestants and Equilibrium Individual Effort
  39. Vertical Differentiation: Multiproduct Strategy to Face Entry?
  40. Rational Sabotage in Cooperative Production with Heterogeneous Agents
  41. Competitive Externalities in Dynamic Monopolies with Stochastic Demand
  42. On the Signalling Role of Debt Maturity
  43. Equilibrium Uniqueness in a Cournot Model with Demand Uncertainty
  44. Monopoly Pricing over Time and the Timing of Investments
  45. Shirking and Squandering in Sharing Games
  46. Nonrevealing Equilibria and Consumption-Based Asset Pricing Models
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