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The limits of meritocracy

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  • Morgan, John
  • Tumlinson, Justin
  • Várdy, Felix

Abstract

We show that meritocracy, in the sense of accuracy of performance ranking, can be too much of a good thing: in contests with sufficiently homogeneous agents, it reduces output and is Pareto inefficient. In contests with sufficiently heterogeneous agents, discouragement and complacency effects further reduce the benefits of meritocracy. Perfect meritocracy may be optimal only for intermediate levels of heterogeneity.

Suggested Citation

  • Morgan, John & Tumlinson, Justin & Várdy, Felix, 2022. "The limits of meritocracy," Journal of Economic Theory, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:jetheo:v:201:y:2022:i:c:s0022053122000047
    DOI: 10.1016/j.jet.2022.105414
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    Cited by:

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    2. Drugov, Mikhail & Ryvkin, Dmitry, 2020. "How noise affects effort in tournaments," Journal of Economic Theory, Elsevier, vol. 188(C).
    3. Christoph Carnehl & Marco Ottaviani & Justus Preusser, 2024. "Designing Scientific Grants," NBER Chapters, in: Entrepreneurship and Innovation Policy and the Economy, volume 4, National Bureau of Economic Research, Inc.
    4. Christian Ewerhart & Marco Serena, 2023. "On the (Im-)Possibility of Representing Probability Distributions as a Difference of I.I.D. Noise Terms," Working Papers tax-mpg-rps-2023-04, Max Planck Institute for Tax Law and Public Finance.
    5. Thomas Giebe & Oliver Gürtler, 2024. "Player Strength and Effort in Contests," ECONtribute Discussion Papers Series 285, University of Bonn and University of Cologne, Germany.
    6. Subhasish M. Chowdhury & Patricia Esteve‐González & Anwesha Mukherjee, 2023. "Heterogeneity, leveling the playing field, and affirmative action in contests," Southern Economic Journal, John Wiley & Sons, vol. 89(3), pages 924-974, January.
    7. Ryvkin, Dmitry & Drugov, Mikhail, 2020. "The shape of luck and competition in winner-take-all tournaments," Theoretical Economics, Econometric Society, vol. 15(4), November.
    8. Beltrametti, Luca & Cardullo, Gabriele, 2024. "Hope, Noise, and the Efficiency of Perfect Meritocracy," IZA Discussion Papers 17532, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Contests; Tournaments; Meritocracy; Contest design;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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