An extensive theoretical literature has developed that investigates the role of promotions as a signal of worker ability. There have been no tests, however, of the empirical validity of this idea. In this paper we develop the theory in a manner that allows us to generate testable predictions,...

We study the effect of product market volatility on a firm’s choice between multiskilling and specialization. We construct a theoretical model that captures the tradeoff between multiskilling (which gives greater flexibility to reassign workers in production) and specialization (which provides...

Applying a simultaneous-equations estimation approach that accounts for both worker and firm behavior, I show that six alternative promotion models can be empirically distinguished to a greater extent than previously thought. I show that classic tournaments, market-based tournaments, and...

We develop a general framework to study contests, containing the well-known models of Tullock (1980) and Lazear and Rosen (1981) as special cases. The contest outcome depends on players' effort and skill, the latter being subject to symmetric uncertainty. The model is tractable, because a...

We develop a general framework for studying contests, including the well-known models of Tullock (1980) and Lazear & Rosen (1981) as special cases. The contest outcome depends on players' efforts and skills, the latter being subject to symmetric uncertainty. The model is tractable, because a...

We show how symmetric equilibria emerge in general two-player contests in which skill and effort are combined to produce output according to a general production technology and players have skills drawn from different distributions. We also show how contests with heterogeneous production...