Managers often face the choice between promoting an internal employee and hiring an external candidate. Using an incentivized experiment, we examine managers’ promote/hire decision and employees’ behavior before and after that decision in a setting in which the external candidate has...

This paper investigates managerial discretion in compensation decisions in a team (i.e., joint production) setting. Specifically, we investigate the conditions under which managers tasked with allocating a discretionary bonus pool are willing to incur a personal cost to obtain ex post...