The Limits of Meritocracy

88 Pages Posted: 10 Dec 2018

See all articles by John Morgan

John Morgan

University of California, Berkeley

Justin Tumlinson

University of Exeter Business School

Felix Várdy

CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2018

Abstract

We show that too much meritocracy, modeled as accuracy of performance ranking incontests, can be a bad thing: in contests with homogeneous agents, it reduces output and isPareto inefficient. In contests with sufficiently heterogeneous agents, discouragement andcomplacency effects further reduce the benefits of meritocracy. Perfect meritocracy maybe optimal only for intermediate levels of heterogeneity.

Keywords: Meritocracy, Efficiency, Level Playing Field, Firm Behavior: Empirical Analysis, Market Design, Equity, Justice, Inequality, and Other Normative Criteria and Measurement, Organization of Production

JEL Classification: D22, D47, D61, D63, L23

Suggested Citation

Morgan, John and Tumlinson, Justin and Várdy, Felix, The Limits of Meritocracy (November 2018). IMF Working Paper No. 18/231, Available at SSRN: https://ssrn.com/abstract=3297652

John Morgan (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Justin Tumlinson

University of Exeter Business School ( email )

Streatham Court
Xfi Building, Rennes Dr.
Exeter, EX4 4JH
United Kingdom

Felix Várdy

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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