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

64 Pages Posted: 1 Oct 2019 Last revised: 18 Dec 2020

See all articles by Thomas H. Noe

Thomas H. Noe

University of Oxford - Said Business School; University of Oxford - Balliol College; Bank of Finland; European Corporate Governance Institute

Dawei Fang

University of Gothenburg - Center For Finance; University of Gothenburg - Department of Economics

Date Written: December 16, 2020

Abstract

Are the winners of highly competitive, high-stakes contests, talented or merely lucky? We address this question by characterizing the relationship between talent, luck, and top performance in the limit as the number of competitors grows without bound. We show that, for many standard statistical distributions of luck, increasing contest competitiveness never ensures that the top performing contestant is talented. In some cases, increasing competitiveness even favors the talentless. We apply our results to a number of economic problems: e.g., identifying ability, effecting social mobility, designing performance metrics, and assessing the effects of globalization on winner-take-all talent competitions.

Keywords: contests, luck, selection, talent

JEL Classification: D81, D82, J24, M50

Suggested Citation

Noe, Thomas H. and Fang, Dawei, Does the Cream Rise to the Top? Luck, Talent, Success, and Merit (December 16, 2020). Available at SSRN: https://ssrn.com/abstract=3456646 or http://dx.doi.org/10.2139/ssrn.3456646

Thomas H. Noe

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 3BJ
United Kingdom

University of Oxford - Balliol College ( email )

Broad St
Oxford, OX1 3BJ
United Kingdom

Bank of Finland ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Dawei Fang (Contact Author)

University of Gothenburg - Center For Finance ( email )

Box 640
Gothenburg, 403 50
Sweden

University of Gothenburg - Department of Economics ( email )

Sweden

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