women s suffrage political responsiveness and child survival in american history women s choices appear to emphasize child welfare more than those of men this paper presents new evidence on how suffrage rights for american women helped children to benefit from the scientific breakthroughs of the bacteriological revolution consistent with standard models of electoral competition suffrage laws were followed by immediate shifts in legislative behavior and large sudden increases in local public health spending this growth in public health spending fueled large scale door to door hygiene campaigns and child mortality declined by 8 15 or 20 000 annual child deaths nationwide as cause specific reductions occurred exclusively among infectious childhood killers sensitive to hygienic conditions

corporate conservatism and relative compensation this paper demonstrates that in a simple setting with managerial concern for reputation and asymmetric information on ability most managers may refrain from undertaking innovations that stochastically dominate an industry standard common components of uncertainty lead to market inferences of managerial ability based on relative performance managers who undertake the industry standard are consequently evaluated with a more accurate benchmark than those innovating discontinuities in compensation when performance is low because of firings lead managers to have differing valuations of an accurate benchmark depending on type in particular very high and very low ability managers are more likely to undertake superior innovations than those of average ability

estimating the effect of hierarchies on information use theory suggests that greater hierarchical distance between a subordinate and his boss makes it more di cult to share abstract and subjective information in decision making a novel data set put together from credit dossiers of large corporate loan applicants enables us to observe the information collected by loan o cers and also how it is used by the ultimate loan approving o cer we flnd that greater hierarchical geographical distance between the information collecting agent and the loan approving o cer leads to less reliance on subjective information and more on objective information by exploiting non linearities in the assignment rules that determine an applicant s hierarchical distance and using information collecting agent flxed efiects we show that our result cannot be driven by endogenous assignment of applicants we also flnd that higher frequency of interactions between the information collecting agent and loan approving o cer both over time and through geographical proximity helps mitigate the efiects of hierarchical distance on information use our results show that hierarchical distance in uences information use and highlights the importance of human touch in communication

the productivity of working hours observations on munition workers most of them women are organised to examine the relationship between their output and their working hours the relationship is non linear below an hour s threshold output is proportional to hours above a threshold output rises at a decreasing rate as hours increase implications of this finding for the estimation of labour supply functions are considered the findings also link up with the current research on the effects of long working hours on accidents and injuries

a simple model of voice we think of voice as a means of information aggregation within groups operating in a variety of settings we explore how the characteristics of groups and their leaders influence voice in relatively homogeneous groups members farthest away from the leader have the best incentives to provide information and their voice tends to moderate policy decisions in large heterogeneous groups where leaders cannot identify individual members the possibilities for informational exchange are severely limited and any communication that exists pushes policies farther to the extreme

meaning and credibility in cheap talk games i define neologism proofness a refinement of perfect bayesian equilibrium in cheap talk games it applies when players have a preexisting common language so that an unexpected message s literal meaning is clear and only credibility restricts communication i show that certain implausible equilibria are not neologism proof in some games no equilibrium is journal of economic literature classification numbers d83 d82 c73

selfish bakers caring nurses a model of work motivation abstract work contributes to people s self image in important ways we propose a model in which effort is unobservable and where individuals have a preference for being important to others this gives the following predictions 1 if a worker s effort is paid by his marginal productivity bakers effort is just like in the standard model 2 if a worker s wage is unaffected by his effort nurses more effort is provided than in the standard model 3 to prevent that shirkers become nurses nurses wages must be kept strictly lower than bakers income at this wage level there will be too few nurses 4 overinvestment in nursing equipment can be justified as a means to attract motivated nurses 5 even with full income compensation both nurses and bakers may experience a net utility loss when losing their job 6 similarly both nurses and bakers may prefer work to welfare even with full income compensation

how important is pro social behaviour in the delivery of public services a number of papers have suggested that pro social behaviour in the workplace may be sensitive to the institutional environment but there is little empirical research that attempts to test this directly using data on worker behaviour this is the aim of this paper we show that individuals in the non profit sector are significantly more likely to do unpaid overtime than those in the for profit sector however we find no evidence of adjustment along either the extensive or intensive margins when individuals change sectors the results of our analysis therefore point to selection and we find supporting evidence that individuals do self select on the basis of their propensity to donate labour

on managerial contracting with asymmetric information abstract this paper deals with asymmetric information in a two period principal agent model where the agent makes investment decisions after observing a private signal we study the case where the current employer has more information than other prospect employers and the case where the private information is not verifiable by the current employer we analyze the effect of these asymmetries on the wage contracts as well as their interplay

a theory of credibility this paper presents models in which one agent must decide whether to trust another whose motives are uncertain reliability can only be communicated through actions in this context it pays for people to build a reputation based on reliable behaviour someone becomes credible by consistently providing accurate and valuable information or by performing useful services the theory provides a justification for long term arrangements without binding contracts it also describes those situations where it pays an agent to cash in on his reputation many decisions depend on trusting someone consumers must decide whether to believe advertisements banks need to judge the reliability of loan applicants and employers must decide how much responsibility to delegate to their employees this paper attempts to model situations that arise when someone is uncertain about whether to trust the people he deals with in this context reputations for reliability are valuable an agent becomes credible by consistently providing accurate valuable information or by always acting responsibly i analyse a series of simple abstract models of information transmission in the basic model there are two agents the sender s and the receiver r who are to play the game a known finite number of times at each stage both players learn the value of a parameter measuring the importance of that period s play of the game that is the value of making a correct decision and s obtains payoff relevant information s then sends a signal to r who makes a decision that affects the welfare of both players after both players learn the consequences of r s decision the process repeats at each stage r must decide what action to take in order to do that he must assess the credibility of s the difficulty arises because r is uncertain about s s preferences when play begins i model this by assuming that with positive probability s has identical preferences to r s is a friend and with positive probability s has completely opposed preferences to r s is an enemy this uncertainty creates a trade off for enemy senders at each stage providing honest information enhances s s reputation but only at the expense of foregoing an opportunity for immediate gain by duping r the possibility that s is a friend lends credibility to what he says but this credibility may also be exploited by an enemy s the principal equilibrium has the following form in the basic model where s has no control over the importance of a given play s typically conveys accurate information for the first several periods r raises the probability he places on s being friendly after receiving accurate information if he believes that an enemy would have lied to him with positive probability the more important the information the more likely an enemy will attempt to deceive r an enemy will eventually take advantage of r by misleading him when this happens the sender loses all opportunities for deception in the future i

managerial reputation and the endgame abstract this paper examines endgame behavior specifically the behavior of managers whose primary concern is to retain their jobs managers are taken to be of two types good and bad and only one manager is randomly selected as the firm s first period manager the manager unobservably chooses the mean and standard deviation limited by a mean standard deviation frontier of the process that generates his observable performance the good manager can choose higher values of the mean of the outcome generating process for given standard deviation than the bad manager can after the first of the two periods the firm s owner must choose to retain or replace her manager based upon performance in an endgame perfect bayesian equilibria of this reputation game a good manager chooses a strategy with minimal standard deviation for a given mean while a bad manager chooses a strategy of maximal standard deviation for a given mean examples of this type of behavior drawn from finance and sports are given in the paper the perfect bayesian equilibria of this game also include conservative reckless and herd managerial behavior

asymmetric information and legislative rules some amendments we reexamine the major tenets of the informational theory of legislative rules focusing on the informational efficiency of rules with varying degrees of restrictiveness when committees are heterogeneous full efficiency is attainable under the unrestrictive open rule as well as the somewhat restrictive modified rule in contrast the restrictive closed rule always leads to inefficiencies when committees are homogeneous the situation is different all equilibria are inefficient regardless of legislative rules but the closed rule leads to greater informational efficiency than does the open rule furthermore the efficiency gains under the closed rule more than offset distributional losses regardless of the degree of preference divergence we also examine the incentives provided by the different rules for information acquisition and committee specialization

a model of expertise we study a model in which perfectly informed experts offer advice to a decision maker whose actions affect the welfare of all experts are biased and thus may wish to pull the decision maker in different directions and to different degrees when the decision maker consults only a single expert the expert withholds substantial information from the decision maker we ask whether this situation is improved by having the decision maker sequentially consult two experts we first show that there is no perfect bayesian equilibrium in which full revelation occurs when both experts are biased in the same direction it is never beneficial to consult both in contrast when experts are biased in opposite directions it is always beneficial to consult both indeed in this case full revelation may be induced in an extended debate by introducing the possibility of rebuttal

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

opinions as incentives we study costs and benefits of differences of opinion between an adviser and a decision maker even when they share the same underlying preferences over decisions a difference of opinion about payoff relevant information leads to strategic information acquisition and transmission a decision maker faces a fundamental trade off a greater difference of opinion increases an adviser s incentives to acquire information but exacerbates the strategic disclosure of any information that is acquired nevertheless when choosing from a rich pool of opinion types it is optimal for a decision maker to select an adviser with some difference of opinion centralization of authority is essential to harness these incentive gains since delegation to the adviser can discourage effort

promotions and incentives in nonprofit and for profit organizations using data from the 1992 95 multi city study of urban inequality an employer survey the authors document a new empirical finding that workers are less likely to receive promotions in nonprofit organizations than in for profit firms the study also uncovers evidence that wage increases associated with promotion were of comparable magnitudes in the two sectors as was the potential for within job wage growth nonprofits were less likely than for profits to base promotions on job performance or merit nonprofits were less likely to use output contingent incentive contracts to motivate workers and the observed difference in promotion rates between the nonprofit and for profit sectors was more pronounced for high skilled than for low skilled workers the authors also propose a theory that potentially explains the broad pattern of evidence they uncover based on the idea that nonprofit workers are more intrinsically motivated attracted to their work for reasons transcending material compensation than are f

optimal incentive contracts in the presence of career concerns theory and evidence this paper studies optimal incentive contracts when workers have career concerns concerns about the effects of current performance on future compensation we show that the optimal compensation contract optimizes total incentives the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract thus the explicit incentives from the optimal compensation contract should be strongest for workers close to retirement because career concerns are weakest for these workers we find empirical support for this prediction in the relation between chief executive compensation and stock market performance

occupational social value and returns to long hours this paper examines the phenomenon of uncompensated long hours in jobs with pro social characteristics and presents evidence that long hour wage premiums and occupational social value are substitutes in compensating salaried workers who supply hours exceeding the standard working week i show that the social value of an occupation in particular the degree to which jobs involve helping or providing service to others is inversely related to long hour pay allowing for heterogeneity in the degree to which workers value their job s helping orientation lets me explore how gender differences in employees attitudes toward pro social behaviour can explain some of the observed occupational sorting trends and gender differences in long hour compensation women tend to be more strongly drawn to helping occupations and at the same time receive lower long hour premiums in these jobs relative to men i offer a theoretical framework to rationalize the empirical trends

the hidden cost of raising voters expectations reference dependence and politicians credibility abstract two politicians compete to get elected each politician is characterized by a valence which is unobservable to the electorate and can take one of two values high or low the representative voter prefers politicians with high valence but random shocks may lead him to appoint a low valence politician politicians make statements concerning their valence if the voter is a standard expected utility maximizer politicians statements lack any credibility and no information transmission takes place by introducing reference dependence and loss aversion we show that truthful communication is possible in equilibrium and we characterize the conditions under which it can arise intuitively these behavioral biases introduce a cost of overstating one s valence as overstatements may shift the electorate s preferences toward better skilled opponents

the economics of vocation or why is a badly paid nurse a good nurse abstract given the longstanding shortage of nurses in many jurisdictions why could not nursing wages be raised to attract more people into the profession we tell a story in which the status of nursing as a vocation implies that increasing wages reduces the average quality of applicants attracted the underlying mechanism accords with the notion that increasing wages might attract the wrong sort of people into the profession and highlights an in efficiency wage mechanism particular to vocations which makes wages sticky up wards the analysis has implications for job design in vocation based sectors such as nursing and teaching

the theory of implementation when the planner is a player abstract in this paper we study a situation where the planner cannot commit to a mechanism and the outcome function is substituted by the planner herself we assume i agents have complete information and play simultaneously and ii given the messages announced by the agents the planner reacts in an optimal way given her beliefs this transforms the implementation problem into a signaling game we derive necessary and sufficient conditions for interactive implementation under different restrictions on the planner s out of equilibrium beliefs we compare our results to standard results on nash implementation journal of economic literatureclassification numbers c72 d71 d82

managerial incentives and capital management the paper shows how career concerns rather than effort aversion can induce a natural incongruity in risk preferences between managers and superiors a model based on learning about managerial talent is developed to study second best contractual remedies we show that the optimal wage contract is an option of the value of the manager s human capital for insurance reasons and that consequently rationing of capital is often required to counterbalance the manager s resulting incentive to overinvest rationing is strictly superior to price decentralization offering one reason for the prevalence of centralized capital budgeting procedures

optimal wages in the market for nurses an analysis based on heyes model in a recent paper the economics of vocation or why is a badly paid nurse a good nurse anthony heyes posits a novel adverse selection mechanism whereby the average quality of nurses employed is declining in the wage and evaluates the consequences for an optimizing monopsonistic national health service nhs i conduct a standard welfare analysis here based on the proposed model it turns out that contrary to concerns raised by heyes the nhs will always choose a wage that is lower than the wage chosen by a welfare maximizing social planner nurse are underpaid i also extend the analysis to the case of a competitive labor market for nurses

when does coordination require centralization this paper compares centralized and decentralized coordination when manag ers are privately informed and communicate strategically we consider a multi divisional organization in which decisions must be adapted to local conditions but also coordinated with each other information about local conditions is dispersed and held by self interested division managers who communicate via cheap talk the only available formal mechanism is the allocation of decision rights we show that a higher need for coordination improves horizontal com

wages and performance based pay evidence from the nlsy abstract the link between performance and pay should be strongest where performance is more accurately observed brown industrial and labor relations review 1990 43 1655 1825 rand journal of economics 1992 23 366 375 more productive workers self select into jobs with performance based pay consequently workers whose pay is based on performance should earn more than those whose pay is not based on such measures this paper adds to the literature on the subject by providing new empirical evidence for brown s model using the national longitudinal surveys of youth nlsy data

when time binds substitutes for household production returns to working long hours and the skilled gender wage gap we provide evidence that constraints that prevent highly skilled women from working long hours hinder gender pay equality we show that relaxing one such constraint by increasing the supply of subs

credible communication in dynastic government abstract this paper studies information disclosure in a model of dynastic government when information about past policy choices comes exclusively from the reports of previous administrations each administration has an incentive to choose its suboptimal one shot expenditure policy and then misrepresent its choice to its successor consequently it has been suggested that horizontal accountability i e a system of governance where auditing functions lie outside the executive branch can ensure credible disclosure of a government s activities this paper suggests a cautious approach to that view the baseline model examines the reporting incentives of an external auditor who can independently verify the information each period even with auditing credible disclosure is shown to be problematic various extensions to this baseline model are examined in one extension liberal i e those prefering larger government expenditures and conservative those prefering smaller expenditures regimes and auditors evolve over time it is shown that conservative liberal auditors are not credible when the current regime is also conservative liberal moreover because information transmission stops when the auditor s and the regime s biases coincide effective deterrents even in the good periods when the auditor s and the administration s biases differ are difficult to construct in all periods the equilibrium requirement of auditor neutrality constrains the dynamic incentives for efficient policy choices these constraints are shown to bind away from optimal policies in standard constructions of equilibrium various ways in which auditing protocols can overcome these problems are discussed

competition and incentives with motivated agents a unifying theme in the literature on organizations such as public bureaucracies and private nonprofits is the importance of mission as opposed to profit as an organizational goal such mission oriented organizations are frequently staffed by motivated agents who subscribe to the mission this paper studies incentives in such contexts and emphasizes the role of matching the mission preferences of principals and agents in increasing organizational efficiency matching economizes on the need for high powered incentives it can also however entrench bureaucratic conservatism and resistance to innovations the framework developed in this paper is applied to school competition incentives in the public sector and in private nonprofits and the interdependence of incentives and productivity between the private for profit sector and the mission oriented sector through occupational choice jel d23 d73 h41 l31 the late twentieth century witnessed a historic high in the march of market capitalism with unbridled optimism in the role of the profit motive in promoting welfare in the production of private goods moreover this generated a broad consensus on the optimal organization of private good production through privately owned competitive firms when it comes to the provision of collective goods no such consensus has emerged debates about the relative merits of public and private provision still dominate this paper suggests a contracting approach to the provision of collective goods it focuses on two key issues how to structure incentives and the role of competition between providers at its heart is the idea that organizations that provide collective goods cohere around a mission 2 thus production of collective goods can be viewed as mission oriented

pandering to persuade a principal chooses one of multiple projects or an outside option an agent is privately informed about the projects benets and shares the principal s preferences except for not internalizing her value from the outside option we show that for moderate outside option values strategic communication is characterized by pandering the agent biases his recommendation toward conditionally better looking projects even when both parties would be better o with some other project a project that has lower expected value can be conditionally better looking we develop some comparative statics of pandering pandering is also induced by an optimal mechanism without transfers

the burden of proof in a game of persuasion abstract an arbitrator faces the task of deciding the level of compensation to be received by a plaintiff from a defendant the arbitrator must rely on the verifiable submissions of the two interested parties because the information of the interested parties is not verifiable the unravelling argument has no force nevertheless a class of equilibria of this game gives rise to a particularly simple decision rule for the arbitrator which appeals to a probability distribution over the payoff relevant state space alone the uncertainty concerning the precision of the disputants information enter as parameters in this distribution this parametrization yields an answer to how the arbitrator s decision rule should be modified as the information of the disputants changes journal of economic literature classification numbers d78 d82 l51

performance pay and wage inequality an increasing fraction of jobs in the u s labor market explicitly pay workers for their performance using bonus pay commissions or piece rate contracts using data from the panel study of income dynamics we show that compensation in performance pay jobs is more closely tied to both observed and unobserved productive characteristics of workers than compensation in non performance pay jobs we also find that the return to these productive characteristics increased faster over time in performance pay than in non performance pay jobs we show that this finding is consistent with the view that underlying changes in returns to skill due for instance to technological change induce more firms to offer performance pay contracts and result in more wage inequality among workers who are paid for performance thus performance pay provides a channel through which underlying changes in returns to skill get translated into higher wage inequality we conclude that this channel accounts for 21 of the growth in the variance of male wages between the late 1970s and the early 1990s and for most of the increase in wage inequality above the eightieth percentile over the same period

selective reporting of factual content by commercial media the authors study the market for factual content and examine whether competition increases or decreases its provision factual content is supplied by commercial media firms which observe a set of facts depicting the state of the world and selectively decide how to report them consumers value content that matches their opinion which incentivizes media firms to slant their reports by omitting certain facts novel features in the authors model include consumers ability to anticipate the media s incentives for slant and the requirement that all media stances must be supported by facts furthermore consumers find reports with more facts to be more convincing despite consumers ability to detect slant and their demand for factual support the research shows that competition results in consumers reading fewer facts and being unable to update their prior beliefs about the state of the world the authors also find that a monopoly medium may be more polarizing than competitive media and that polarized report

the strategist and the tactician abstract an agent recommends one of n alternatives to a decision maker dm who needs to choose one alternative each alternative has a benefit and a cost the agent knows the benefits but not the costs the dm knows the costs but not the benefits the dm s payoff equals the benefit minus the cost the agent s payoff equals the benefit the interpretation is that the agent is a tactician whereas the dm is a strategist in the sense that they have a common component in their preferences the benefit but the strategist further has big picture considerations the costs which are absent from the tactician s world view if there are two alternatives the agent recommends a maximum benefit alternative in any non trivial equilibrium with more than two alternatives such equilibrium exists if the model is symmetric but not if asymmetry exceeds a certain level

information aggregation in polls we study information transmission via polling a policymaker polls constitu ents who differ in their information and ideology to determine policy full rev elation is an equilibrium in a poll with a small sample but not with a large one in large polls full information aggregation can arise in an equilibrium where constituents endogenously sort themselves into centrists who respond truth fully and extremists who do not we find polling statistics that ignore strate gic behavior yield biased estimators and mischaracterize the polvs margin of error we construct estimators that account for strategic behavior finally we compare polls and elections jel c42 d83

optimal delegation via a strategic intermediary abstract this paper studies the optimal design of delegation rule in a three tier principal intermediary agent hierarchy in this hierarchy monetary transfer is not feasible delegation is made sequentially and all players are strategic we characterize the optimal delegation mechanism it is shown that the single interval delegation a la holmstrom is optimal only when the intermediary is moderately biased otherwise as responses to the distortion caused by a biased intermediary the optimal delegation set may involve a hole thus multi interval delegation set would arise when subordinates have opposing biases this result sheds some light on policy threshold effects slight changes in the underlying state cause a jump in the policy responses

is it whom you know or what you know an empirical assessment of the lobbying process abstract do lobbyists provide issue specific information to members of congress or do they provide special interests access to politicians we present evidence to assess the role of issue expertis

the effects of overtime pay regulation on worker compensation proponents claim that a statutory overtime premium by raising the relative cost of overtime may encourage firms to substitute employment for overtime hours the author argues that there will be no real effects if firms reduce straight time wages so as to offer the same package of weekly compensation and hours of work that was acceptable initially empirical analysis suggests that wage differentials do arise to mitigate the purely demand driven effects predicted by previous models but these differentials are not large enough to neutralize overtime pay regulation completely copyright 1991 by american economic association

working long hours and early career outcomes in the high end labor market this study establishes empirically a positive but nonlinear relationship between weekly hours and hourly wage growth for workers who put in over 47 hours per week 5 extra hours are associated with a 1 increase in annual wage growth this correlation is not present when hours are lower the relationship is especially strong for young professionals data on promotions provide evidence in support of a job ladder model that combines higher skill sensitivity of output in higher level jobs with heterogeneous preferences for leisure the results can be used to account for part of the gender wage gap

female voting power the contribution of women s suffrage to the growth of social spending in western europe 1869 1960 women s suffrage was a major event in the history of democratization in western europe and elsewhere public choice theory predicts that the demand for publicly funded social spending is systematically higher where women have and use the right to vote using historical data from six western european countries for the period 1869 1960 we provide evidence that social spending out of gdp increased by 0 6 1 2 in the short run as a consequence of women s suffrage while the long run effect is three to eight times larger we also explore a number of other public finance implications of the gender gap

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking

rat race redux adverse selection in the determination of work hours in law firms this paper describes an organizational setting in which professional employees are required to work inefficiently long hours the focus of the authors investigation is large law firms the income sharing that characterizes legal partnerships creates incentives to promote associates who have a propensity to work very hard law firms use indicators of this propensity especially an associate s record of billable hours in promotion decisions reliance upon work hours as an indicator leads to a rat race equilibrium in which associates work too many hours the authors find evidence in support of this conclusion with data they collected from two large law firms copyright 1996 by american economic association