Measuring Strategic Behaviour in the Workplace

Firms can adjust their payment schemes and production requirements as they gather new information about the productivity of their workers. This feedback induces forward-looking agents to strategically withhold production (and information), anticipating its effect on their future payments or production requirements.

The link between contracts and past performance has become known as the ratchet principle. The resulting inefficiency has been blamed for the relative scarcity of explicit performance incentives in the real economy. During his stay at CES in May, Charles Bellemare will be working on an experimental project aimed at measuring the importance of the ratchet effect in a real firm.

Mr Bellemare’s main research interests are the economic performance of immigrants, microeconometric methods, and behavioural as well as experimental economics. Most of his recent work involves estimating structural models of individual behaviour to predict counterfactual responses of firm policies to changes in government. While visiting CES, Mr. Bellemare will be giving a mini-course on this topic, introducing graduate students to the principles of structural estimation and emphasising the benefits of exploiting experimental data to estimate the models of interest.

Charles Bellemare is Professor of Economics at Laval University in Québec City. He holds a PhD in Economics from Tilburg University. He is a regular member of the Centre interuniversitaire sur le risque, les politiques économiques et l’emploi (CIRPÉE).