Lecostey, Sophie

A Model of Adverse Promotion - 2014.


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This article considers the incentivizing role of promotion. It presents a simple theoretical model where there is uncertainty among candidates for promotion as to the type of assessor mandated by the organization to evaluate them. The assessor can be of two types: those who love power or those who act ethically. We show that an adverse promotion occurs whatever the type of assessor, the term “adverse” in this context meaning unfair and/or inefficient. The unfairness is linked to the possibility of the assessor being one of those who love power. In effect, in the separating Perfect Bayesian Equilibrium, such an assessor would promote a candidate from among the less competent in order to signal his type and induce future candidates to court favor. Inefficiency arises with both types of assessor, but is different in nature: either it is tied to courting behavior of candidates, or it is due to the discouragement of certain candidates. This article goes on to discuss the role of competition between workers and proposes different solutions to the problems that are brought to light. JEL codes: M 51.