Strategic Shirking in Competitive Labor Markets: A General Model of Multi-Task Promotion Tournaments with Employer Learning

Abstract

In a multi-task, market-based promotion tournament model, under different environments concerning employer learning about worker ability, it is shown that: i) Asymmetric learning in multi-task jobs is a necessary condition for strategic (i.e., underperforming on certain tasks to increase the promotion probability). ii) When learning becomes increasingly symmetric on one task, the effort allocated to that task could increase or decrease, but effort on the other task increases. iii) Strategic shirking does not occur in equilibrium in single-task models. iv) Promotions signal worker ability even when there is symmetric learning on one task, if learning is asymmetric on another.