Strategic promotion, reputation, and responsiveness in bureaucratic hierarchies

Abstract

While existing studies usually model promotion as a bilateral interaction between promoter and promotee, it is not uncommon that the promoter is under the influence of a third party. For instance, authoritarian rulers may consider how their interactions with local agents change the way that citizens view them. Similarly, a mid-tier officer in a bureaucratic hierarchy often concerns herself with her image in the eyes of her superior when managing her subordinates. In this paper, we construct a game-theoretic model to investigate promotion strategies when promoters have reputation concerns. We show that promoters can use promotion as a signaling tool, where she can deliberately postpone promoting the subordinate to enhance her own reputation. Furthermore, the promoter has extra incentives to shirk, knowing that she can manipulate promotion in the future. Thus, strategic promotions decrease government responsiveness. Counter-intuitively, such a decrease is more severe when intra-bureaucracy information is more transparent. In other words, transparency may do more harm than good. We conduct a case study of the Chinese bureaucracy and provide supportive evidence.