The Promotion Rule under Imperfect Observability of the Employee’s Ability - Theoretical Economics Letters

TEL > Vol.4 No.8, October 2014

Theoretical Economics Letters

Volume 4, Issue 8 (October 2014)

ISSN Print: 2162-2078 ISSN Online: 2162-2086

Google-based Impact Factor: 1.19 Citations h5-index & Ranking

The Promotion Rule under Imperfect Observability of the Employee’s Ability ()

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Download as PDF (Size: 2471KB) PP. 662-665

DOI: 10.4236/tel.2014.48084 3,104 Downloads 4,009 Views Citations

Author(s)

Shota Araki¹, Daiji Kawaguchi^1,2

Affiliation(s)

¹Graduate School of Economics, Hitotsubashi University, Tokyo, Japan.
²IZA, Bonn, Germany.

ABSTRACT

This note provides the closed-form solution for the model by Lazear [1]. The employer adjusts the performance standard for promotion when the employer observes only the imperfect index of the employee’s ability. The adjustment margin is larger when the performance depends heavily on luck and depends lightly on the employee’s ability.

KEYWORDS

Peter Principle, Promotion, Employer’s Learning

Share and Cite:

Araki, S. and Kawaguchi, D. (2014) The Promotion Rule under Imperfect Observability of the Employee’s Ability. Theoretical Economics Letters, 4, 662-665. doi: 10.4236/tel.2014.48084.

Cited by

[1]	University Prestige, Performance Evaluation, and Promotion: Estimating the employer learning model using personnel datasets
	RIETI Discussion Paper Series 15-E-027, 2015

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