Garicano, Luis and Rayo, Luis (2016) Relational knowledge transfers. CEP Discussion Paper (1412). London School of Economics and Political Science. Centre for Economic Performance, 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) |
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| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2016 The Authors |
| Divisions: | Economics Management Centre for Economic Performance |
| Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor |
| JEL classification: | 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 |
| Date Deposited: | 09 May 2016 15:21 |
| Last Modified: | 27 Oct 2024 18:30 |
| Funders: | Economic and Social Research Council, Economic and Social Research Council |
| URI: | http://eprints.lse.ac.uk/id/eprint/66427 |
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