Promotion Tournaments with Multiple Tasks
This article analyses promotion tournaments where candidates engage in multiple tasks. We consider a promotion rule where the winner of the promotion tournament is randomly selected from the best performers at each task. The promotion tournament can achieve an efficient outcome for any production uncertainty (observability) of tasks and substitutability in the effort cost when employees are risk neutral and homogeneous. The promotion decision should be based much more on the outcome in a more uncertain task. If employees are heterogeneous in their ability to undertake a task, then the outcome of an ability-dependent task should be relied upon more in the promotion decision than the outcome of a simple task.
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- Itoh, Hideshi, 1994. "Job design, delegation and cooperation: A principal-agent analysis," European Economic Review, Elsevier, vol. 38(3-4), pages 691-700, April.
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