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Biases in Subjective Performance Evaluation

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  • KAWAGUCHI Daiji
  • OWAN Hideo
  • TAKAHASHI Kazuteru

Abstract

We develop a theoretical model of subjective performance evaluation by the supervisor with possible discriminatory taste against the subordinate and imperfect observability of the latter's output. We assume that characteristic differences between the supervisor and the subordinate affect the precision of information that the former acquires through workplace interactions. We test the empirical predictions of the model using personnel data of a large manufacturing company in Japan. The following three findings corroborate the supervisor's learning of the subordinate's true ability: (1) supervisors give more candid evaluation of their subordinates whose job tenure in the current position is longer; (2) supervisors tend to give more candid evaluation of their subordinates who share the same demographic characteristics such as family structure, education, and age; and (3) supervisors' learning of worker ability seems to be slower for female workers than for males. We do not find any noticeable tendency that supervisors give more favorable evaluation to subordinates in the same social category.

Suggested Citation

  • KAWAGUCHI Daiji & OWAN Hideo & TAKAHASHI Kazuteru, 2016. "Biases in Subjective Performance Evaluation," Discussion papers 16059, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:16059
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    File URL: https://www.rieti.go.jp/jp/publications/dp/16e059.pdf
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    References listed on IDEAS

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    1. Kevin Lang, 1986. "A Language Theory of Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 363-382.
    2. George Baker, 2000. "The Use of Performance Measures in Incentive Contracting," American Economic Review, American Economic Association, vol. 90(2), pages 415-420, May.
    3. Laura Giuliano & David I. Levine & Jonathan Leonard, 2011. "Racial Bias in the Manager-Employee Relationship: An Analysis of Quits, Dismissals, and Promotions at a Large Retail Firm," Journal of Human Resources, University of Wisconsin Press, vol. 46(1), pages 26-52.
    4. Richard W. Johnson & David Neumark, 1997. "Age Discrimination, Job Separations, and Employment Status of Older Workers: Evidence from Self-Reports," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 779-811.
    5. George Baker, 2002. "Distortion and Risk in Optimal Incentive Contracts," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 728-751.
    6. Edward P. Lazear, 2004. "The Peter Principle: A Theory of Decline," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 141-163, February.
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