Does the Cream Rise to the Top? Luck, Talent, Success, and Merit
64 Pages Posted: 1 Oct 2019 Last revised: 18 Dec 2020
Date Written: December 16, 2020
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
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