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http://ssrn.com/abstract=967900
 
 

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Near-Efficient Equilibria in Collaborative Meritocracies


Anna Gunnthorsdottir


University of New South Wales (UNSW) - Australian Graduate School of Management; University of New South Wales (UNSW) - Australian Graduate School of Management

Roumen Vragov


The Right Incentive PLLC

Stefan Seifert


University of Karlsruhe

Kevin A. McCabe


George Mason University - Department of Economics; George Mason University School of Law

February 17, 2009


Abstract:     
We examine theoretically and experimentally how a society's grouping and stratification rules affect incentives and efficiency, and compare meritocratic and ascriptive grouping. We present a multi-level model of social production, and extend the usual single-group-level analysis of cooperation to a broadly defined system, in which individuals compete for inclusion in stratified groups based on the contributions they make. Group members share their collective output equally amongst themselves. The mechanism has two pure strategy Nash equilibria, one close to Pareto optimal. The latter equilibrium is asymmetric and rather complex for experimental subjects. Nonetheless, subjects tacitly coordinate this equilibrium very reliably, demonstrating equilibrium's predictive power and providing empirical support for payoff dominance. Our behavioral findings also point to a meritocracy's "naturalness" and effectiveness in eliciting high social contributions. The results make a theoretical and empirical case for why social organization should be based on contribution rather than privilege. They also indicate why societies are increasingly becoming performance-based meritocracies, and are relevant to many forms of contemporary social organization.

Number of Pages in PDF File: 52

Keywords: social stratification, meritocracies, mechanism design, non-cooperative games, experiment, team production

JEL Classification: D29, C72, C92

working papers series


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Date posted: March 8, 2007 ; Last revised: October 6, 2009

Suggested Citation

Gunnthorsdottir, Anna and Vragov, Roumen and Seifert, Stefan and McCabe, Kevin A., Near-Efficient Equilibria in Collaborative Meritocracies (February 17, 2009). Available at SSRN: http://ssrn.com/abstract=967900 or http://dx.doi.org/10.2139/ssrn.967900

Contact Information

Anna Gunnthorsdottir (Contact Author)
University of New South Wales (UNSW) - Australian Graduate School of Management ( email ) ( email )
unsw
Sydney, NSW 2052
Australia
University of New South Wales (UNSW) - Australian Graduate School of Management ( email ) ( email )
unsw
Sydney, NSW 2052
Australia
Roumen Vragov
The Right Incentive PLLC ( email )
249 Smith St. PMB 112
Brooklyn, NY 11231
United States
Stefan Seifert
University of Karlsruhe ( email )
Postbox
76128 Karlsruhe, DE 76128
Germany
Kevin A. McCabe
George Mason University - Department of Economics ( email )
4400 University Drive
Fairfax, VA 22030
United States
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
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