A Model of Adverse Promotion

This paper considers the incentive role of promotion. It presents a simple theoretical model in which candidates for promotion are uncertain about the type of evaluator mandated by the Organization to review them. Adverse promotion is then shown to occur, the term ?adverse? meaning here unfair and/or inefficient. Unfairness is tied to the possible existence of an evaluator enjoying power. Indeed, in the separating Perfect Bayesian Equilibrium such an evaluator promotes a worker from among the less competent candidates in order to signal his type and thence to induce further candidates to court his favour. Inefficiency arises with both types of evaluator (the power-liking and the ethically-acting) but is different in nature : either it is tied to courting behaviour of workers, or it is due to the discouragement of some workers. The role played by competition between heterogeneous workers is then discussed and some remedies are suggested. JEL codes : M 51.