Things Can Only Get Worse? An Empirical Examination of the Peter Principle
University of Aberdeen Business School Working Paper No. 2006-05
Posted: 15 Jan 2008
Date Written: October 2006
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
Suggested Citation: Suggested Citation
Barmby, Tim and 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: https://ssrn.com/abstract=1083629
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