The Peter Principle: An Experiment
David Dickinson and
Marie Claire Villeval
No 728, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon
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)
JEL-codes: C91 J24 J33 M51 M52 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
ftp://ftp.gate.cnrs.fr/RePEc/2007/0728.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)
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: https://EconPapers.repec.org/RePEc:gat:wpaper:0728
Access Statistics for this paper
More papers in Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon Contact information at EDIRC.
Bibliographic data for series maintained by Nelly Wirth ( this e-mail address is bad, please contact ).