Faculty Digital Archive

Archive@NYU >
NET Institute >
NET Institute Working Papers Series >

Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/29478

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

Files in This Item:

File Description SizeFormat
Blatter_Niedermayer_08-06.pdf552 kBAdobe PDFView/Open

Items in Faculty Digital Archive are protected by copyright, with all rights reserved, unless otherwise indicated.

 

The contents of the FDA may be subject to copyright, be offered under a Creative Commons license, or be in the public domain.
Please check items for rights statements. For information about NYU’s copyright policy, see http://www.nyu.edu/footer/copyright-and-fair-use.html 
Valid XHTML 1.0 | CSS