Strategic Shirking in Promotion Tournaments

We provide a theoretical analysis of promotion tournaments in which workers 'strategically shirk' by purposely under-performing on tasks that are de-emphasized in a promotion rule, while over-performing in tasks that are emphasized in the rule, thereby increasing their chances of promotion and a wage increase. To mitigate the multitasking problem, the firm might commit upfront to a promotion rule that requires more balance in the performances across tasks in a job than would otherwise be justified on productivity grounds. The analysis shows how 'Putt's Law' (which states that competent workers are sometimes passed over for promotion in favor of incompetent ones) can be understood as a natural consequence of the firm designing optimal promotion rules