| In Chapter 1 (a joint paper with Santhi Hejeebu) we offer a model of the job design problem where outside activities serve an incentive purpose. Allowing outside activities increases the scope for obtaining rents from a strong reputation, and hence increases the willingness to acquire and sustain such reputation. When firms provide employees with a means for signaling high ability, inside and outside activities can become complements and increase overall incentives. Similarly, when employment implies access to corporate resources for personal benefit, the employee increases effort inside in order to retain access to those assets. We show that these synergies obtain in the employment of U.S. faculty members and in the employment of agents in the English East India Company.; In Chapter 2, we develop a theory that explains the willingness of firms to pay for the general training of their workers. We assume that labor markets are perfectly competitive, but there is imperfect contractibility of human capital. Under these assumptions, we show that when training and specific human capital are complements, a firm would pay for the former in order to increase the incentives of the worker to make specific investments. We then show how this model can take account of the cross-sectional evidence on training. Furthermore, since training induces the acquisition of complementary specific skills, it provides the firm with a mechanism to increase retention, and reduce turnover.; In Chapter 3, we show that cooperation in finitely repeated games does not generally arise because of the assumption that players cannot walk out of the game, and start playing with another opponent. We study two-player games where player 1 can decide to let the opponent continue in the game or replace it with a new player. We also allow the possibility of player 2 quitting the game. When only layoffs can occur, cooperation takes place in finite horizons due to the threat that termination of the relationship imposes on player 2. However, quits limit that cooperation to those cases where the outside option for player 2 is small (lower than some Nash equilibrium of the stage game). |
