Big Fish in Small (and Big) Ponds - A Study of Careers

64 Pages Posted: 9 Jan 2019 Last revised: 5 May 2020

See all articles by Jed DeVaro

Jed DeVaro

California State University, East Bay

Oliver Gürtler

University of Cologne

Marc Gürtler

University of Braunschweig - Institute of Technology, Department of Finance

Christian Deutscher

Bielefeld University

Date Written: July 3, 2019

Abstract

Talented, ambitious workers (big fish) often join highly competitive organizations (big ponds), though they sometimes instead choose less competitive organizations (small ponds) offering brighter promotion prospects. Big fish exist in both types of organizations, though average worker ability is higher in big ponds. Top executives enjoy higher wages in big ponds. Choosing a big pond allows workers to signal high ability. Workers sometimes overestimate or underestimate their abilities, choosing the wrong pond. They also vary in their desire to be promoted. All of the preceding phenomena are shown to be consistent with equilibrium in a new theoretical model of careers.

Keywords: careers, promotions, private information about worker ability, asymmetric learning, job-assignment signaling, big fish, big pond, small fish, small pond

JEL Classification: J24, M53

Suggested Citation

DeVaro, Jed and Gürtler, Oliver and Gürtler, Marc and Deutscher, Christian, Big Fish in Small (and Big) Ponds - A Study of Careers (July 3, 2019). Available at SSRN: https://ssrn.com/abstract=3306924 or http://dx.doi.org/10.2139/ssrn.3306924

Jed DeVaro

California State University, East Bay ( email )

25800 Carlos Bee Boulevard
Hayward, CA California 94542
United States
1(510)885-3289 (Phone)

HOME PAGE: http://www2.cbe.csueastbay.edu/fac_page/final/index.php?id=308

Oliver Gürtler (Contact Author)

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Marc Gürtler

University of Braunschweig - Institute of Technology, Department of Finance ( email )

Abt-Jerusalem-Str. 7
Braunschweig, 38106
Germany

Christian Deutscher

Bielefeld University ( email )

Universitätsstraße 25
Bielefeld, NRW 33613
Germany

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