Optimal Promotion Policies with the Looking-Glass Effect
AbstractThis article considers a model where the agent is uncertain about his innate ability and instead makes an inference from others' (namely, the principal's) perception, as often emphasized in the psychology literature. When the principal has superior knowledge about the agent's productivity than the agent himself, the principal has an incentive to use promotions strategically to boost the agent's self-confidence. Within this framework the optimal promotion policy depends not only on the agent's current expected ability type but also on the history of his previous job assignments. We use this fact to explain why we rarely observe demotions in organizations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 24 (2006)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JOLE/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Julia Nafziger, 2008. "Job Assignments, Intrinsic Motivation and Explicit Incentives," Bonn Econ Discussion Papers bgse5_2008, University of Bonn, Germany.
- Junichiro Ishida, 2006.
"Contracting with Self-Esteem Concerns,"
OSIPP Discussion Paper
06E004, Osaka School of International Public Policy, Osaka University.
- Junichiro Ishida, 2012.
"Dynamically Sabotage-Proof Tournaments,"
Journal of Labor Economics,
University of Chicago Press, vol. 30(3), pages 627 - 655.
- Junichiro Ishida, 2012. "Dynamically Sabotage-Proof Tournaments," ISER Discussion Paper 0838, Institute of Social and Economic Research, Osaka University.
- Junichiro Ishida, 2006. "Dynamically Sabotage-Proof Tournaments," OSIPP Discussion Paper 06E001, Osaka School of International Public Policy, Osaka University.
- Junichiro Ishida, 2012. "Promotion without Commitment: Signaling, Time Inconsistency and Decentralization of the Firm," ISER Discussion Paper 0843, Institute of Social and Economic Research, Osaka University.
- Koch, Alexander K. & Nafziger, Julia, 2007.
"Job Assignments under Moral Hazard: The Peter Principle Revisited,"
IZA Discussion Papers
2973, Institute for the Study of Labor (IZA).
- Alexander K. Koch & Julia Nafziger, 2012. "Job Assignments under Moral Hazard: The Peter Principle Revisited," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(4), pages 1029-1059, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If references are entirely missing, you can add them using this form.