The firm as the locus of social comparisons: Standard promotion practices versus up-or-out

Auriol, Emmanuelle; Friebel, Guido; von Bieberstein, Frauke (2016). The firm as the locus of social comparisons: Standard promotion practices versus up-or-out. Journal of economic behavior & organization, 121, pp. 41-59. Elsevier 10.1016/j.jebo.2015.09.005

Text The firm as the locus of social comparisions_Journal of Economic Behavior & Organization_FvB_2016.pdf - Published Version Restricted to registered users only Available under License Publisher holds Copyright. Download (824kB) | Request a copy

We suggest a parsimonious dynamic agency model in which workers have status concerns. A firm is a promotion hierarchy in which a worker's status depends on past performance. We investigate the optimality of two types of promotion hierarchies: (i) standard promotion practices, where agents have a job guarantee, and (ii) “up-or-out”, in which agents are fired when unsuccessful. We show that up-or-out is optimal if success is difficult to achieve. When success is less hard to achieve, standard promotion practices are optimal provided the payoffs associated with success are moderate. Otherwise, up-or-out is, again, optimal.

Interest & Impact

Downloads

4 since deposited on 05 Jan 2017
0 in the past 12 months

Citations

5 Citations in Web of Science ®
6 Citations in Scopus

Search

in Google Scholar™

Services

Actions (login required)

Edit item

Actions (login required)

Edit item