Knowledge that Transforms

A public college randomly assigns applicants into a group that can enroll immediately and a group that can do so only after 1 year. One and a half years after the first group enrolled, individuals in that group were 19 percentage points more likely to be enrolled than those who had to wait. I present a model of educational decision making that predicts a substantial effect of deferral on attainment only when opportunity costs (wages) can vary across time within individuals. I estimate the model to project the long-term effect of deferred admission on attainment for different groups of applicants.

Employees in public agencies rarely have pay for performance: instead their incentives are often guided by a sense of professionalism. This paper concerns how organizations should monitor professionals. The primary outcome of the paper is that weak incentives lead public agencies to exhibit bias in their oversight, by rewarding the interests of their employees to the detriment of other constituencies’ concerns. In some instances, this bias is complete by entirely ignoring other interests.

This paper examines how sales managers, acting as agents of the firm, game the staffing and incentives of their subordinates. Sales managers on a quota’s cusp have a unique personal incentive to retain and lower quotas for poor-performing subordinates, allowing one to isolate a manager’s interest from the firm’s. Using microdata from 244 firms that subscribe to a cloud-based service for processing sales compensation, I estimate that 13%–15% of both quota adjustments and retentions among poor performers are explained by managers’ incentives around quotas. Although a minority of poor performers are subsequently terminated or transferred, most are retained indefinitely.