Transparency, Career Concerns, and Incentives for Acquiring Expertise

Abstract

An agent, who cares about signaling his ability, chooses among dierent projects that generate observable outcomes. The agent's information about which project de- livers a good outcome depends on both his ability and his eort. This paper examines how the agent's incentives for eort change depending on whether or not the agent's project choice is observed. If this choice is publicly observed, the agent's project choice is distorted towards particular types of projects. When the outcomes of these advan- taged projects are particularly sensitive to the agent's information, such transparency boosts the agent's information-gathering incentives. However, when public observa- tion of project choice leads the agent to choose information-insensitive projects, then such transparency dampens incentives. This provides a more nuanced view of the implications of action transparency in the literature on career concerns for experts.