“Yes-Men in Tournaments
We study a rank-order tournament in which employees acquire and use private information for an investment decision. In this environment, competition for promotion can turn employees into "yes men" who make investment decisions that excessively agree with their supervisor's preconceived notions. Employees become "yes men" when their supervisor's prior opinion is strong and the parties receive little subsequent information. In response to this inefficiency, the firm may intensify the tournament's incentives (e.g., increase the wage raise from promotion), increase the correlation of employees' information (e.g., use tournaments for employees handling similar tasks), reduce the importance of any individual supervisor's prior opinion (e.g., evaluate employees using a committee), or use a different incentive mechanism altogether (e.g., individual contracts).
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: 695 Park Avenue, New York, NY 10065|
Web page: http://econ.hunter.cuny.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lorne Carmichael, 1983.
"Firm-Specific Human Capital and Promotion Ladders,"
Bell Journal of Economics,
The RAND Corporation, vol. 14(1), pages 251-258, Spring.
- Baker, George P & Jensen, Michael C & Murphy, Kevin J, 1988.
" Compensation and Incentives: Practice vs. Theory,"
Journal of Finance,
American Finance Association, vol. 43(3), pages 593-616, July.
- Paul Heidhues & Johan Lagerlöf, 2000.
"Hiding Information in Electoral Competition,"
CIG Working Papers
FS IV 00-06, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG), revised Feb 2002.
- Prendergast, Canice & Stole, Lars, 1996. "Impetuous Youngsters and Jaded Old-Timers: Acquiring a Reputation for Learning," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1105-34, December.
- Edward P. Lazear & Sherwin Rosen, 1979.
"Rank-Order Tournaments as Optimum Labor Contracts,"
NBER Working Papers
0401, National Bureau of Economic Research, Inc.
- Jason G. Cummins & Ingmar Nyman, 2005.
"The Dark Side of Competitive Pressure,"
RAND Journal of Economics,
The RAND Corporation, vol. 36(2), pages 361-397, Summer.
- Jason G. Cummins & Ingmar Nyman, 2002. "The Dark Side of Competitive Pressure," Economics Working Paper Archive at Hunter College 02/3, Hunter College Department of Economics, revised 2002.
- Jason G. Cummins & Ingmar Nyman, 2002. "The dark side of competitive pressure," Finance and Economics Discussion Series 2002-43, Board of Governors of the Federal Reserve System (U.S.).
- Malcomson, James M, 1984. "Work Incentives, Hierarchy, and Internal Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 92(3), pages 486-507, June.
- Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
- Canice Prendergast, 1993. "The Role of Promotion in Inducing Specific Human Capital Acquisition," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 523-534.
- Matthew Gentzkow & Jesse Shapiro, 2005.
"Media Bias and Reputation,"
NBER Working Papers
11664, National Bureau of Economic Research, Inc.
- Drago, Robert & Garvey, Gerald T, 1998. "Incentives for Helping on the Job: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 1-25, January.
- Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
- Dye, Ronald A, 1984. "The Trouble with Tournaments," Economic Inquiry, Western Economic Association International, vol. 22(1), pages 147-49, January.
When requesting a correction, please mention this item's handle: RePEc:htr:hcecon:417. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jonathan Conning)
If references are entirely missing, you can add them using this form.