Dynamic Evaluation Design

A principal owns a firm, hires an agent of uncertain productivity, and designs dynamic policy for evaluating his performance. The observes ongoing evaluations decides when to quit. When not quitting, the is paid wage that linear in expected productivity; claims residual After players secure fixed outside options. I show equilibrium Pareto efficient. For broad class performance technologies, deterministically grows with tenure. My analysis suggests endogenous evaluation plays important role shaping careers organizations. (JEL D21, D82, D83, J24, J31, J41, M51)