The Limits of Meritocracy

80 Pages Posted: 21 Aug 2018 Last revised: 24 Dec 2020

See all articles by John Morgan

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group

Justin Tumlinson

Loughborough University; Ludwig Maximilian University of Munich (LMU)

Felix Várdy

CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: January 21, 2019

Abstract

We show that too much meritocracy, modeled as accuracy of performance ranking in contests, can be a bad thing: in contests with 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.

Keywords: Contest Theory; Mechanism Design; Auctions

JEL Classification: D82; D44

Suggested Citation

Morgan, John and Tumlinson, Justin and Várdy, Felix, The Limits of Meritocracy (January 21, 2019). Available at SSRN: https://ssrn.com/abstract=3216950 or http://dx.doi.org/10.2139/ssrn.3216950

John Morgan

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-2669 (Phone)
810-885-5959 (Fax)

HOME PAGE: http://faculty.haas.berkeley.edu/rjmorgan/

Justin Tumlinson (Contact Author)

Loughborough University ( email )

Ashby Road
Nottingham NG1 4BU
Great Britain
+44 (0) 2038051339 (Phone)

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Felix Várdy

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

Poschinger Str. 5
Munich, DE-81679
Germany

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