Ingratiation and Favoritism in Organizations

We study within one theoretical framework two related phenomena – ingratiation by subordinates and favoritism of superiors towards their employees. We express ingratiation by opinion conformity of the worker when reporting his opinion to the manager. Favoritism of the manager is inferred from a bias when reporting toa firm her observation of the worker's performance. We show interdependences of favoritism and ingratiation by investigating their influence on wages and profit. We study the more sophisticated manager and firm that try to infer the worker's opinion and the manager's observation. Such higher degrees of sophistication can mitigate the consequences of ingratiation and favoritism.