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The Limits of Meritocracy

Felix Vardy (), John Morgan and Justin Tumlinson

No 2018/231, IMF Working Papers from International Monetary Fund

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: WP; aggregate output; Meritocracy; Efficiency; Level Playing Field; contest organizer; competition effect; prize schedule; equilibrium behavior; study contest design; participation prize; output measure; Competition; Income inequality; Budget planning and preparation (search for similar items in EconPapers)
Pages: 87
Date: 2018-11-01
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Handle: RePEc:imf:imfwpa:2018/231