Holmström’s (1982/99) career concerns model has become an important workhorse for the
analysis of agency issues in many fields. The underlying signal jamming argument requires
players to use information in a Bayesian way – which may or may not reasonably
approximate real-life decision makers’ behavior. Testing this theory with field data is difficult
since typically little is known about the information that individuals base their decisions on,
and this explains the dearth of empirical studies. We provide experimental evidence that the
signal jamming mechanism works in a laboratory setting. Moreover, subjects' beliefs fit
remarkably well requirements imposed by the Bayesian equilibrium concept.
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