Lecture Introduction

Almost all firms rely on supervisor discretion to select and motivate workers. But what are the benefits and costs of doing so? In partnership with a large garment manufacturing firm in Tanzania, we implement a series of field experiments to examine supervisor discretion in the selection of workers for promotion to managerial positions. In a first field experiment with supervisors, we randomize whether supervisors face financial incentives based on the quality of their referrals. In a complementary experiment with workers, we randomly vary whether supervisor referrals are emphasized in the selection process when workers make application decisions. Our results show that discretion crowds in supervisors’ private information about the managerial potential of workers. Supervisors use private information beyond what the firm could infer from existing administrative data, workers’ self-assessments, or coworker referrals. However, discretion also generates costs for firms. Supervisor referrals are not perfectly aligned with the firm’s objectives, and supervisors show preferences consistent with gender bias and favoritism. Furthermore, discretion is disliked by workers and reduces the number of workers who apply for promotion. Despite the costs of discretion, supervisors select workers with significantly higher measured managerial ability relative to more objective selection methods.

Speaker

Dr. Yihong Huang, Assistant Professor, Guanghua School of Management, Peking University

Lecture Time

Wednesday, March 12, 2025, 13:00–14:30

Venue

Room 347, Qiushi Building

Lecture Language

Chinese and English

Moderator

Dr. Zeyang Chen

Speaker Biography

Dr. Yihong Huang is an Assistant Professor at the Guanghua School of Management, Peking University. She earned her Ph.D. in Economics from Harvard University in 2024. Her primary research areas include behavioral economics, experimental economics, and political economy. Her work employs behavioral economics theories to understand real-world phenomena, such as perceptions of social norms, political discourse, media bias, and the flow of information in social networks.

Faculty and students are warmly welcome to attend!