A Model of Careers in a Simple Hierarchy: Generalizing the Junior Professional's Decision Rule

Donald G. Morrison and David C. Schmittlein

Bell Journal of Economics, 1981, vol. 12, issue 1, 310-320

Abstract: Cooter and Restrepo propose a career path model for junior professionals who can decide to stay and hope for promotion to the senior level or leave to take an outside opportunity. In this article their assumption of a uniform distribution for time to promotion is first changed to the more natural and empirically tested exponential distribution. The resulting decision rule for the junior professional becomes very simple and intuitively appealing and can be applied continuously. Additional generalizations of the exponential distribution are then analyzed. Some very interesting results on the effects of uncertainty are obtained. Myopic decision rules are shown to be nonoptimal in certain situations. However, these changes in the Cooter and Restrepo model are obtained at a cost. The model cannot be closed. The demand for labor is not taken into account., Thus, the supply side is considered in isolation. Nevertheless, the more appealing time to promotion densities used here give better insights into the behavior of junior professionals within the basic Cooter and Restrepo framework.

Date: 1981
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