The Peter Principle: An Experiment

David Lewis Dickinson and Marie-Claire Villeval ()

Post-Print from HAL

Abstract: The Peter Principle states that, after a promotion, the observed output of promoted employees tends to fall. Lazear (2004) models this principle as resulting from a regression to the mean of the transitory component of ability. Our experiment reproduces this model in the laboratory by means of various treatments in which we alter the variance of the transitory ability. We also compare the efficiency of an exogenous promotion standard with a treatment where subjects self-select their task. Our evidence confirms the Peter Principle when the variance of the transitory ability is large. In most cases, the efficiency of job allocation is higher when using a promotion rule than when employees are allowed to self-select their task. This is likely due to subjects’ bias regarding their transitory ability. Naïve thinking, more than optimism/pessimism bias, may explain why subjects do not distort their effort prior to promotion, contrary to Lazear’s (2004) prediction.

Keywords: experiment; Peter Principle; promotion; selection (search for similar items in EconPapers)
Date: Written
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00201225/en/
View list of references

Downloads: (external link)
http://halshs.archives-ouvertes.fr/docs/00/20/12/25/PDF/0728.pdf (application/pdf)

Related works:
Working Paper: The Peter Principle: An Experiment (2007)
Working Paper: The Peter Principle: An Experiment (2007)
Working Paper: The Peter Principle: An Experiment (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hal:journl:halshs-00201225_v1

Access Statistics for this paper

More papers in Post-Print from HAL
Series data maintained by CCSD ().