Dynamic Games

Dynamic delegation in promotion contests

• Current version: August 2023 (New version coming soon!).

I study how organizations assign tasks to identify the best candidate to promote among a pool of workers. When only non-routine tasks are informative about a worker’s potential and non-routine tasks are scarce, the organization’s preferred promotion system is an index contest. Each worker is assigned a number that depends only on his own potential. The principal delegates the non-routine task to the worker whose current index is the highest and promotes the first worker whose type exceeds a threshold. Each worker’s threshold depends only on his own type. In this environment, task allocation and workers’ motivation interact through the organization’s promotion decisions. The organization designs the workers’ careers to both screen and develop talent. So competition is mediated by the allocation of tasks: who gets the opportunity to prove themselves is a determinant factor in promotions. Finally, features of the index contest can help understand the prevalence of fast-track promotion, the role of seniority, or when a group of workers is systemically advantaged.