A Bright Side of Peter-Principle Promotions

Robert Dur, Kimiyuki Morita and Takeharu Sogo
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Robert Dur: Erasmus University Rotterdam
Kimiyuki Morita: Senshu University
Takeharu Sogo: SKEMA Business School

No 26-028/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: Promotion to managerial roles is often strongly based on workers' performance in their current roles rather than on their managerial aptitude—the Peter principle. This paper provides a novel rationale for this apparent mismatch when promotions serve no incentive role. We model workers who care about meeting managers' expectations, and managers with interpersonal projection bias: when forming expectations about workers' performance, they give excessive weight to their own past performance. We show that organizations benefit from promoting high-performing workers to managers even when they have low managerial aptitude, because such managers hold high expectations, inducing greater effort.

Keywords: Peter principle; Guilt aversion; Interpersonal Projection Bias; Incentives (search for similar items in EconPapers)
JEL-codes: D21 D91 M51 M52 M54 (search for similar items in EconPapers)
Date: 2026-06-05
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20260028

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