TEL  Vol.4 No.8 , October 2014
The Promotion Rule under Imperfect Observability of the Employee’s Ability
ABSTRACT
This note provides the closed-form solution for the model by Lazear [1]. The employer adjusts the performance standard for promotion when the employer observes only the imperfect index of the employee’s ability. The adjustment margin is larger when the performance depends heavily on luck and depends lightly on the employee’s ability.

Cite this paper
Araki, S. and Kawaguchi, D. (2014) The Promotion Rule under Imperfect Observability of the Employee’s Ability. Theoretical Economics Letters, 4, 662-665. doi: 10.4236/tel.2014.48084.
References
[1]   Lazear, E. (2004) The Peter Principle: A Theory of Decline. Journal of Political Economy, 112, S141-S163. http://dx.doi.org/10.1086/379943

 
 
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