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Less Competition, More Meritocracy?

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  • Dawei Fang
  • Thomas Noe

Abstract

Uncompetitive contests for grades, promotions, retention, and job assignments, which feature lax standards and limited candidate pools, are often criticized for being unmeritocratic. We show that when contestants are strategic, lax standards and exclusivity can make selection more meritocratic. When many contestants compete for a few promotions, strategic contestants adopt high-risk strategies. Risk-taking reduces the correlation between performance and ability. Through reducing the effects of risk-taking, “Peter principle” promotion policies, which entail promoting some contestants that are unlikely to be worthy, can increase the overall correlation between selection and ability and thus further meritocracy.

Suggested Citation

  • Dawei Fang & Thomas Noe, 2022. "Less Competition, More Meritocracy?," Journal of Labor Economics, University of Chicago Press, vol. 40(3), pages 669-701.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/716920
    DOI: 10.1086/716920
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    Cited by:

    1. Letina, Igor & Liu, Shuo & Netzer, Nick, 2023. "Optimal contest design: Tuning the heat," Journal of Economic Theory, Elsevier, vol. 213(C).
    2. Whitmeyer, Mark, 2023. "Submission costs in risk-taking contests," Games and Economic Behavior, Elsevier, vol. 142(C), pages 101-112.
    3. Embrey, Matthew & Seel, Christian & Philipp Reiss, J., 2024. "Gambling in risk-taking contests: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 221(C), pages 570-585.
    4. Li, Bo & Wu, Zenan & Xing, Zeyu, 2023. "Optimally biased contests with draws," Economics Letters, Elsevier, vol. 226(C).
    5. Hwang, Sung-Ha & Koh, Youngwoo & Lu, Jingfeng, 2023. "Constrained contests with a continuum of battles," Games and Economic Behavior, Elsevier, vol. 142(C), pages 992-1011.

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