Lazear's Stochastic Interpretation of the Peter Principle: An Empirical Examination Based on Nba-Data
University of Vienna Organization and Planning Working Paper No. OP 2003-07
11 Pages Posted: 28 Mar 2004
Date Written: June 2003
The Peter Principle says that people are promoted to their level of incompetence. There are several possible explanations for this. Lazear (2001) puts forward a stochastic interpretation of the Peter Principle, which states that promoted individuals might have had some luck that contributed to their promotions and disappears afterwards on the average. This explanation of falling productivity after promotions is analysed in this paper, applied to tournaments with relative performance measurements and empirically tested using data from the NBA.
Keywords: NBA, performance, Peter Principle, sports economics, stochastic, tournament
JEL Classification: M51, M52, L83, C12, J31, J60
Suggested Citation: Suggested Citation