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http://hdl.handle.net/2451/29478
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| Title: | Informational Hold-Up, Disclosure Policy, and Career Concerns on
theExample of Open Source Software Development |
| Authors: | Blatter, Marc - University of Bern
Niedermayer, Andras - Northwestern University |
| Keywords: | Open source software, signaling |
| Issue Date: | 2008 |
| Series/Report no.: | NET Institute Working Paper;08-06 |
| Abstract: | We consider software developers who can either work on an open source
project or on a closed source project. The former provides a publicly
available signal about their talent, whereas the latter provides a
signal only observed by their employer. We show that a talented employee
may initially prefer a less paying job as an open source developer to
commercial closed source projects, because a publicly available signal
gives him a better bargaining position when renegotiating wages with his
employer after the signal has been revealed. Also, we derive conditions
under which two effects suggested by standard intuition are reversed: a
'pooling equilibrium' (with both talented and untalented workers doing
closed source) is less likely if differences in talent are large; a
highly visible open source job leads to more effort in a career concerns
setup. The former effect is because a higher productivity of talented
workers raises not only the value but also the cost of signaling; the
latter stems from more effort and the choice of a high visibility job
being substitutes for the purpose of signaling. Results naturally apply
to other industries with high and low visibility jobs, e.g. academic
rather than commercial research, consulting rather than management. |
| URI: | http://hdl.handle.net/2451/29478 |
| Appears in Collections: | NET Institute Working Papers Series
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