Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm

Ishida, Junichiro

Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm

Ishida, Junichiro

Institute of Social and Economic Research Discussion Papers, 2012, 843

Number of Access:483（2025-11-04 06:12 Counts）

Identifier to cite or link to this item: https://hdl.handle.net/11094/23383

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Title	Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm
Creator	NRID 1000040324222 1000040324222 ORCID 0000-0002-0674-0216 0000-0002-0674-0216 researchmap permalink read0116302 read0116302 Scopus Author ID 36927932200 36927932200 CreatorName Ishida, Junichiro
Subject	Assignment
	Incentive provision
	Tournament
	Promotion
	Commitment
	Time inconsistency
Abstract	This paper explores the consequences and implications of the “dual role of promotion” in an environment where a firm must simultaneously achieve two distinct goals – assignment and incentive provision – via the strategic use of promotions. We argue that the efficient promotion rule is generally not implementable, as it necessarily entails timeinconsistent objectives: the firm is always tempted ex post to promote the worker with the highest upside potential rather than the one with the highest output. This ex post bias towards the assignment role of promotion leads to inefficient task choices where too many workers are induced to work on the difficult task to signal their productivities. The framework identifies the costs and benefits of decentralization, in relation to factors such as the levels of human and social capital, the degree of market competition, firm size, and distance to the technology frontier, and provides predictions that are in line with recent empirical evidence.
Publisher	The Institute of Social and Economic Research, Osaka University
Source Title	Institute of Social and Economic Research Discussion Papers
Volume (Issue)	843
Date of Issued	2012-05
Language	English
Handle URL	https://hdl.handle.net/11094/23383
Relation.references	URI https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2012/DP0843.pdf
Access Rights	metadata only access
Category	ディスカッション／ワーキング・ペーパー DP/WP
Category	Institute of Social and Economic Research Discussion Papers

Resource Type	technical report
Local Type	DP/WP
DCMI Type	Text
DCTERMS.bibliographicCitation	Institute of Social and Economic Research Discussion Papers. 2012, 843
DC.title	Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm
DC.creator	Ishida, Junichiro
DC.publisher	The Institute of Social and Economic Research, Osaka University
DC.language' scheme='DCTERMS.RFC1766	English
DC.type' scheme='DCTERMS.DCMIType	Text
DCTERMS.issued' scheme='DCTERMS.W3CDTF	2012-05
DC.relation' scheme='DCTERMS.URI	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2012/DP0843.pdf
DC.subject	Assignment
	Incentive provision
	Tournament
	Promotion
	Commitment
	Time inconsistency
DCTERMS.abstract	This paper explores the consequences and implications of the “dual role of promotion” in an environment where a firm must simultaneously achieve two distinct goals – assignment and incentive provision – via the strategic use of promotions. We argue that the efficient promotion rule is generally not implementable, as it necessarily entails timeinconsistent objectives: the firm is always tempted ex post to promote the worker with the highest upside potential rather than the one with the highest output. This ex post bias towards the assignment role of promotion leads to inefficient task choices where too many workers are induced to work on the difficult task to signal their productivities. The framework identifies the costs and benefits of decentralization, in relation to factors such as the levels of human and social capital, the degree of market competition, firm size, and distance to the technology frontier, and provides predictions that are in line with recent empirical evidence.
DC.format	23383
citation_title	Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm
citation_author	Ishida, Junichiro
citation_publisher	The Institute of Social and Economic Research, Osaka University
citation_language	English
citation_date	2012-05
citation_journal_title	Institute of Social and Economic Research Discussion Papers
citation_volume	843
citation_public_url	https://hdl.handle.net/11094/23383
citation_abstract_html_url	https://www.iser.osaka-u.ac.jp/static/resources/docs/dp/2012/DP0843.pdf

Promotion without Commitment : Signaling, Time Inconsistency and Decentralization of the Firm

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