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Things Can Only Get Worse? An Empirical Examination of the Peter Principle


Tim Barmby


University of Aberdeen - Business School

Barbara Eberth


University of Aberdeen - Health Economics Research Unit

Ada Ma


University of Aberdeen
October 2006

University of Aberdeen Business School Working Paper No. 2006-05

Abstract:     
The results reported in this paper suggest the possible operation of the Peter Principle in a large hierarchical financial sector firm. This result holds even after we allow for variation in optimal effort over stages in the hierarchy. The method also allows us to attribute the contributory factors for the observed fall in performance after a promotion. It appears that approximately 2/3 of the fall is due to the Peter Principle and 1/3 due to lessening incentives.

Keywords: Tournaments, Peter Principle

JEL Classification: J41

working papers series


Date posted: January 15, 2008  

Suggested Citation

Barmby, Tim, Eberth, Barbara and Ma, Ada, Things Can Only Get Worse? An Empirical Examination of the Peter Principle (October 2006). University of Aberdeen Business School Working Paper No. 2006-05. Available at SSRN: http://ssrn.com/abstract=1083629

Contact Information

Tim Barmby (Contact Author)
University of Aberdeen - Business School ( email )
Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom
Barbara Eberth
University of Aberdeen - Health Economics Research Unit ( email )
University of Aberdeen
Foresterhill
Aberdeen, Scotland
United Kingdom
Ada Ma
University of Aberdeen ( email )
Dunbar Street
Aberdeen AB24 3QY, Scotland AB24 3QY
United Kingdom
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