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http://ssrn.com/abstract=3293
 
 

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Favoritism in Organizations


Canice Prendergast


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Robert H. Topel


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)


JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 5, October 1996

Abstract:     
Objective measures of employee performance are rarely available. Instead, firms rely on subjective judgments by supervisors. Subjectivity opens the door to favoritism, where evaluators act on personal preferences toward subordinates to favor some employees over others. Firms must balance the costs of favoritism arbitrary rewards and less productive job assignments against supervisors' demands for authority over subordinates. We analyze the conditions under which favoritism is costly to organizations and the effects of favoritism on compensation, the optimal extent of authority and the use of bureaucratic rules.

JEL Classification: J53, M12

Accepted Paper Series


Not Available For Download

Date posted: September 5, 1996  

Suggested Citation

Prendergast, Canice and Topel, Robert H., Favoritism in Organizations. JOURNAL OF POLITICAL ECONOMY, Vol. 104, No. 5, October 1996. Available at SSRN: http://ssrn.com/abstract=3293

Contact Information

Canice Prendergast (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7309 (Phone)
773-702-0458 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert H. Topel
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-7524 (Phone)
773-702-2699 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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