Time：4:00 pm - 5:30 pm, Nov. 27th, 2020
(Jay S. and Jeanne P. Benet Professor of Finance, Simon School of Business, University of Rochester)
ID: 868 6778 9526
Adverse selection benefits firms able to identify talent. An informed intermediary expropriates agents’ ability by threatening to fire and expose them to undervaluation of their skill. An agent’s track record gradually reduces the intermediary’s information advantage. In response, the intermediary starts churning well-performing agents she knows are less skilled. The accelerated reduction in information advantage boosts profits, as retained agents accept below-reservation wages to build reputation faster. Agents prefer starting their careers working for an intermediary, as benefits from building reputation faster more than offset expropriation costs. Our analysis applies to professions where talent is essential, and performance is publicly observable.
Professor Ron Kaniel is Jay S. and Jeanne P. Benet Professor of Finance in the Simon School of Business at University of Rochester. His research interests include Asset Pricing, Capital Markets, Portfolio Delegation and Relative Wealth Considerations. Prior to joining the University of Rochester, he was the Associate Professor at Duke University. He was awarded the Eurofidai best paper award in 2016 and the Best paper prize in the 2016 Utah Winter Finance Conference. He has published extensively in the top academic journals including Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Review of Financial Studies and so on. Professor Kaniel received his Ph.D. from the University of Pennsylvania in 1999.