Working Paper: CEPR ID: DP10343
Authors: Mikhail Drugov
Abstract: We study the design of promotions in an organization where agents belong to groups that advance their cause. Examples and applications include political groups, ethnicities, agents motivated by the work in the public sector and corruption. In an overlapping generations model, juniors compete for promotions. Seniors have two kinds of discretion: direct discretion which allows an immediate advancement of their cause and promotion discretion ("patronage") which allows a biasing of the promotion decision in favour of the juniors from their group. We consider two possible goals of the principal, maximizing juniors' efforts and affecting the steady-state composition of the senior level towards the preferred group, and show that patronage may be strictly positive in both of them. We also apply the second setting to the case of corruption.
Keywords: bureaucracy; contest; corruption; motivated agents; patronage; promotion
JEL Codes: D73; H41; J45; J70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| direct discretion (Y80) | junior efforts (Y40) |
| promotion discretion (M51) | junior efforts (Y40) |
| patronage (P26) | junior efforts (Y40) |
| patronage (P26) | senior level composition (Y20) |
| planner's preferences (R14) | optimal patronage (H21) |
| size effect + motivation effect (D91) | optimal patronage (H21) |
| honest seniors (J14) | avoid promoting corrupt juniors (D73) |
| corrupt seniors (D73) | sell promotions to corrupt juniors (D73) |