Up-or-out policies when a worker imitates another

A worker's productivity may increase if he imitates another worker he believes had performed well. The benefits of imitation can lead a firm to adopt up-or-out rules, and to pay senior workers more than junior workers, though observed differences in productivity are small.

► Personnel policies should recognize that junior workers will imitate senior workers.
► A senior worker's productivity increases with the junior worker's output.
► An employer may prefer to fire an unproductive worker instead of reducing his wage.