An organization's promotion decision between two workers is modeled as a problem of boundedly rational learning about ability. The decisionmaker can bias noisy rank-order contests sequentially, thereby changing the information they convey. The optimal final-period bias favors the "leader," reinforcing his likely ability advantage. When optimally biased rank-order information is a sufficient statistic for cardinal information, the leader is favored in every period. In other environments, bias in early periods may (1) favor the early loser, (2) be optimal even when the workers are equally rated, and (3) reduce the favored worker's promotion chances. Copyright 1991 by The Review of Economic Studies Limited.
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Volume (Year): 58 (1991) Issue (Month): 1 (January) Pages: 15-41 Download reference. The following formats are available: HTML
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