Biases in Subjective Performance Evaluation

Author Name KAWAGUCHI Daiji (Faculty Fellow, RIETI) / OWAN Hideo (Faculty Fellow, RIETI) / TAKAHASHI Kazuteru (Kyushu Sangyo University)
Creation Date/NO. March 2016 16-E-059
Research Project Economic Analysis of Human Resource Allocation Mechanisms within the Firm: Insider econometrics using HR data
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We develop a theoretical model of subjective performance evaluation by the supervisor with possible discriminatory taste against the subordinate and imperfect observability of the latter's output. We assume that characteristic differences between the supervisor and the subordinate affect the precision of information that the former acquires through workplace interactions. We test the empirical predictions of the model using personnel data of a large manufacturing company in Japan. The following three findings corroborate the supervisor's learning of the subordinate's true ability: (1) supervisors give more candid evaluation of their subordinates whose job tenure in the current position is longer; (2) supervisors tend to give more candid evaluation of their subordinates who share the same demographic characteristics such as family structure, education, and age; and (3) supervisors' learning of worker ability seems to be slower for female workers than for males. We do not find any noticeable tendency that supervisors give more favorable evaluation to subordinates in the same social category.