Does the Cream Rise to the Top? Luck, Talent, Success, and Merit

In hypercompetitive environments, are the “winners” talented or merely lucky? We answer this question by characterizing the relationship between talent, luck, and top performance in large competitions, where the number of competitors is unbounded. Our results imply that, for most standard statistical distributions of luck, no degree of competitiveness can ensure that talent always trumps luck. In some cases, increased competition even favors the talentless. We apply our results to a number of important economic problems: assessing managerial, analyst, and student talent, analyzing the effects of globalizing winner-take-all competitions, and determining how contest designs affect meritocratic selection