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

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DOI: 10.4236/tel.2014.48084    3,099 Downloads   3,995 Views  Citations
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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.

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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.

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