Strategic Shirking in Competitive Labor Markets: A General Model of Multi-Task Promotion Tournaments with Employer Learning
53 Pages Posted: 8 Feb 2017 Last revised: 25 Dec 2018
Date Written: December 20, 2018
In a multi-task, market-based promotion tournament model, under different environments concerning employer learning about worker ability, it is shown that:
i) Asymmetric learning in multi-task jobs is a necessary condition for "strategic shirking" (i.e., underperforming on certain tasks to increase the promotion probability).
ii) When learning becomes increasingly symmetric on one task, the effort allocated to that task could increase or decrease, but effort on the other task increases.
iii) Strategic shirking does not occur in equilibrium in single-task models.
iv) Promotions signal worker ability even when there is symmetric learning on one task, if learning is asymmetric on another.
Keywords: strategic shirking, promotions, classic and market-based tournaments, symmetric learning, asymmetric learning, inefficient job assignments, inefficient effort allocation
JEL Classification: J24, M53
Suggested Citation: Suggested Citation