A SEQUENTIAL EQUILIBRIUM FOR THE ARMY'S TARGETED SELECTIVE REENLISTMENT BONUS PROGRAM

摘要

We compute a sequential equilibrium for the U.S. Army's Targeted Selective Reenlistment Bonus Program in which the Army offers a bonus, soldiers with a low cost of serving in an undesirable location accept the bonus and are sent to an undesirable location, and soldiers with a high cost of serving in an undesirable location reenlist but decline the bonus. We find that this program benefits both the Army and soldiers, increases retention, increases the number of soldiers who serve in an undesirable location, and better matches soldiers io assignments. We discuss implications of our model on human resource management practices for the Army in its administration of the bonus program and its application to other large organizations that set wages through a rules-based mechanism.