Near-Efficient Equilibria in Collaborative Meritocracies

52 Pages Posted: 8 Mar 2007 Last revised: 6 Oct 2009

See all articles by Anna Gunnthorsdottir

Anna Gunnthorsdottir

UNSW Australia Business School, School of Management; UNSW Australia Business School, School of Management

Roumen Vragov

The Right Incentive PLLC

Stefan Seifert

University of Karlsruhe

Kevin A. McCabe

George Mason University - Department of Economics

Date Written: 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.

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

JEL Classification: D29, C72, C92

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: https://ssrn.com/abstract=967900 or http://dx.doi.org/10.2139/ssrn.967900

Anna Gunnthorsdottir (Contact Author)

UNSW Australia Business School, School of Management ( email )

unsw
Sydney, NSW 2052
Australia

UNSW Australia Business School, School of Management ( 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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
98
Abstract Views
971
rank
290,748
PlumX Metrics