The Limits of Meritocracy

A sandwich lunch will be provided from 12:00


We show that too much meritocracy, modeled as accuracy of relative performance evaluation, 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.