Performance cycles

David Lagziel, Ehud Lehrer

Research output: Contribution to journalArticlepeer-review

Abstract

A decision maker repeatedly exerts efforts to produce new outputs, while being compensated based on his past and current production levels. We show that the decision maker’s optimal strategy dictates a cyclic oscillatory performance whenever the compensation depends on recent past performance. We apply our model to various economic settings such as the delegated portfolio-managers problem, an R &D investment problem, and a dynamic advertising problem.

Original languageAmerican English
Pages (from-to)999-1024
Number of pages26
JournalEconomic Theory
Volume77
Issue number4
DOIs
StatePublished - 1 Jun 2024

Keywords

  • C61
  • C62
  • C79
  • Dynamic optimization
  • Performance cycles
  • Performance persistence

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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