Undercover Economist

September 24, 2010 11:30 pm

Dear Economist: How can I guarantee a good reference?

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How can we motivate my tutor to be fair and accurate, and compensate him for his time?

My old university tutor often complains when he has to write references – they take up a lot of his time, and he doesn’t get paid for them. Since he’s doing my prospective employer a service, he thinks they should pay him. However, that means he’s motivated to write me a bad reference, because then I won’t get the job, and I’ll ask him to write me another one – so he gets paid again. Of course, we could say that he only gets paid if I get the job – so he writes me an overly gushing reference. How can we motivate my tutor to write a fair and accurate reference, and compensate him for his time?

Phil C, Aylesbury

Dear Phil,

I am not as concerned as you that your tutor will be tempted into hustling for extra reference-writing work. If he wanted to be paid for mass-mailing hyperbole, he’d have taken a job in public relations.

But there is a deep problem here: your tutor has useful information about you and no particular reason to tell the truth. I am not sure what to suggest. Economists call the problem “mechanism design” and despite a number of recent Nobel prizes and some formidable mathematical theorems, I’ve seen nothing to suggest that I can solve the problem perfectly.

However, one approach is to ally your tutor’s interests with those of your prospective employer. Perhaps he could be awarded a commission: 0.1 per cent of your salary, for as long as you have the job. A couple of hundred successful candidates placed and the sums involved start to build up. If he over-eggs the reference and places you in the wrong job, you won’t last long and he’ll miss out on years or decades of future commission.

I don’t know if this would work, but it has a nice side-effect. It encourages your tutor to teach you something useful: he’ll be getting a cut of the proceeds.

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