The Ponds Dilemma
Is it better to be a big fish in a small pond or a small fish in a big pond? To find out, we study self-selection into contests among a large population of heterogeneous agents. Our simple and highly tractable model generates many testable and sometimes surprising predictions. For example: 1) Entry into the big pond–in terms of show-up fees, number or value of prizes–is non-monotonic in ability; 2) Entry into the more meritocratic (i.e., discriminatory) pond is likewise non-monotonic, exhibiting two interior extrema and disproportionately attracting contestants of very low ability; 3) Changes in reward structures can produce unexpected selection effects. For instance, offering higher show-up fees may lower entry, while raising the value of prizes or making a contest more meritocratic may lower the average ability of entrants.
Year of publication: |
2015
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Authors: | Morgan, John ; Sisak, Dana ; Vardy, Felix |
Publisher: |
Munich : Center for Economic Studies and ifo Institute (CESifo) |
Saved in:
freely available
Series: | CESifo Working Paper ; 5539 |
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Type of publication: | Book / Working Paper |
Type of publication (narrower categories): | Working Paper |
Language: | English |
Other identifiers: | 836299833 [GVK] hdl:10419/123181 [Handle] RePec:ces:ceswps:_5539 [RePEc] |
Classification: | J24 - Human Capital; Skills; Occupational Choice; Labor Productivity ; D44 - Auctions |
Source: |
Persistent link: https://www.econbiz.de/10011388213