Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51773
Authors: 
Berger, Johannes
Herbertz, Claus
Sliwka, Dirk
Year of Publication: 
2011
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5543
Abstract: 
This paper investigates the effects of managerial incentives on favoritism in promotion decisions. First, we theoretically show that favoritism leads to a lower quality of promotion decisions and in turn lower efforts. But the effect can be mitigated by pay-for-performance incentives for managers who decide upon promotion. Second, we analyze matched employer-employee survey data with detailed firm level information on managerial incentive schemes and find that perceived promotion quality is indeed substantially higher when managers receive performance-related pay or participate in gain sharing plans.
Subjects: 
incentives
favoritism
nepotism
tournaments
JEL: 
J33
M51
M52
M54
J71
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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