On the Virtues of Hiring Lemons
Version of Record online: 10 JUL 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Managerial and Decision Economics
Volume 33, Issue 7-8, pages 475–484, October-December 2012
How to Cite
Gürtler, O. and Kräkel, M. (2012), On the Virtues of Hiring Lemons. Manage. Decis. Econ., 33: 475–484. doi: 10.1002/mde.2558
- Issue online: 18 SEP 2012
- Version of Record online: 10 JUL 2012
Recruiting high-ability workers and implementing optimal efforts are among the key objectives of a firm's personnel policy. We show that, if the firm applies a tournament scheme—that is, a competitive career system—selection and incentive issues are strictly interrelated, thus leading to a fundamental conflict: if the firm is primarily interested in balanced worker competition, there will be a rationale for hiring low-ability workers (‘lemons’). Copyright © 2012 John Wiley & Sons, Ltd.