Job Promotion Tournaments and Imperfect Recall

In this paper, a promotion tournament is considered, where, at the beginning of the tournament, it is unknown how long the tournament lasts. Further, the promotion decision is based on the assessments of a supervisor with imperfect recall. In line with psychological research, the supervisor is assumed to either value early or recent impressions more strongly. It is shown that e¤ort may increase or decrease, as the probability of promotion in a certain period gets higher. The single e¤ects determining the sign of the e¤ort change oftentimes depend on how the supervisor processes information. Key words: Promotion Tournament, Promotion Probability, Imperfect Recall JEL classi…cation: J33, M51, M52 I would like to thank Marion Eberlein, Matthias Kräkel and Anuschka Sieber for helpful comments. Financial support by the Deutsche Forschungsgemeinschaft (DFG), SFB-TR 15 (Governance and the e¢ ciency of economic systems), is gratefully acknowledged. Oliver Gürtler, Department of Economics, BWL II, University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany. Tel.:+49-228-739214, Fax:+49-228-739210; E-mail: [email protected]