Relational knowledge transfers

Garicano, Luis and Rayo, Luis (2016) Relational knowledge transfers. CEP Discussion Paper, No 1412. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

An expert with general knowledge trains a cash-constrained novice. Faster training increases the novice’s productivity and his ability to compensate the expert; it also shrinks the stock of knowledge yet to be transferred, reducing the expert’s ability to retain the novice. The profit-maximizing agreement is a multi-period apprenticeship in which knowledge is transferred gradually over time. The expert adopts a "1/e rule" whereby, at the beginning of the relationship, the novice is trained just enough to produce a fraction 1/e of the efficient output. This rule causes inefficiently lengthy relationships that grow longer the more patient the players. We discuss policy interventions.

Item Type:

Monograph (Discussion Paper)

Official URL:

http://cep.lse.ac.uk/

Additional Information:

Library of Congress subject classification:

H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor

Journal of Economic Literature Classification System:

J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
M - Business Administration and Business Economics; Marketing; Accounting > M0 - General

Sets:

Departments > Economics
Departments > Management
Research centres and groups > Centre for Economic Performance (CEP)

Identification Number: