Less Competition, More Meritocracy?

53 Pages Posted: 5 Dec 2018

See all articles by Dawei Fang

Dawei Fang

Göteborg University - Center For Finance; Göteborg University - Department of Economics

Thomas H. Noe

University of Oxford - Said Business School; University of Oxford - Balliol College; Bank of Finland; European Corporate Governance Institute

Date Written: October 16, 2018

Abstract

Uncompetitive contests for grades, promotions, and job assignments, which feature lax standards or consider only limited talent pools, are often criticized for being unmeritocratic. We show that, when contestants are strategic, lax standards and exclusivity can make selection more meritocratic. Strategic contestants take more risks in more competitive contests. Risk taking reduces the correlation between selection and ability. By reducing the noise engendered by strategic risk taking, dialing down competition can produce outcomes that better conform with the meritocratic ideal of selecting the best and only the best.

Keywords: selection contests, meritocracy, risk taking

JEL Classification: C72, D82, J01

Suggested Citation

Fang, Dawei and Noe, Thomas H., Less Competition, More Meritocracy? (October 16, 2018). Available at SSRN: https://ssrn.com/abstract=3282723 or http://dx.doi.org/10.2139/ssrn.3282723

Dawei Fang (Contact Author)

Göteborg University - Center For Finance ( email )

Box 640
Gothenburg, 403 50
Sweden

Göteborg University - Department of Economics ( email )

Sweden

Thomas H. Noe

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 3BJ
United Kingdom

University of Oxford - Balliol College ( email )

Broad St
Oxford, OX1 3BJ
United Kingdom

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

European Corporate Governance Institute ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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