Performance cycles

David Lagziel; Ehud Lehrer

doi:10.1007/s00199-023-01516-x

Performance cycles

David Lagziel, Ehud Lehrer

Department of Economics

Research output: Contribution to journal › Article › peer-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 language	English
Pages (from-to)	999-1024
Number of pages	26
Journal	Economic Theory
Volume	77
Issue number	4
DOIs	https://doi.org/10.1007/s00199-023-01516-x
State	Published - 1 Jun 2024

Keywords

C61
C62
C79
Dynamic optimization
Performance cycles
Performance persistence

ASJC Scopus subject areas

Economics and Econometrics

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10.1007/s00199-023-01516-x

Cite this

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KW - Dynamic optimization

KW - Performance cycles

KW - Performance persistence

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Performance cycles

Abstract

Keywords

ASJC Scopus subject areas

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