Abuse of Authority and Hierarchical Communication
Michael Raith2004, The RAND Journal of Economics
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Abstract
Stole, Jean Tirole and many seminar audiences. Any remaining errors are our own. Finally, we would like to thank the European Commission and the Communauté Française de Belgique for financial support.
Figures (1)
Key takeaways
- P hires M. With probability α 0 , M is productive ("good"), and with probability 1 − α 0 , he is unproductive ("bad").
- with probability α, W is good, and with probability 1 − α she is bad.
- The first and the last inequalities state that the expected output is an increasing function of the productivities of M and W. The second inequality states that M is at least as important for production as W. We also assume that q gg − q gb ≥ q bg − q bb , which means that a good manager values having a good rather than a bad worker more highly than does a bad manager.
- Comparing α g and α b , we find that for any φ, a bad M chooses a lower probability than a good M, for two reasons: 1.
- The difference r M −r W affects the optimal φ through α b .
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