The Limits of Meritocracy
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Summary:
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.
Series:
Working Paper No. 2018/231
Subject:
Budget planning and preparation Competition Financial markets Income inequality National accounts Public financial management (PFM)
English
Publication Date:
November 1, 2018
ISBN/ISSN:
9781484381175/1018-5941
Stock No:
WPIEA2018231
Pages:
87
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