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Register a new userDont follow the leader: How ranking performance reduces meritocracy
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Authors
Giacomo Livan
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In the name of meritocracy, modern economies devote increasing amounts of resources to quantifying and ranking the performance of individuals and organisations. Rankings send out powerful signals, which lead to identify the actions of top performers as the `best practices that others should also adopt. However, several studies have shown that the imitation of best practices often leads to a drop in performance. So, should those lagging behind in a ranking imitate top performers or should they instead pursue a strategy of their own? I tackle this question by numerically simulating a stylised model of a society whose agents seek to climb a ranking either by imitating the actions of top performers or by randomly trying out different actions, i.e., via serendipity. The model gives rise to a rich phenomenology, showing that the imitation of top performers increases welfare overall, but at the cost of higher inequality. Indeed, the imitation of top performers turns out to be a self-defeating strategy that consolidates the early advantage of a few lucky - and not necessarily talented - winners, leading to a very unequal, homogenised, and effectively non-meritocratic society. Conversely, serendipity favours meritocratic outcomes and prevents rankings from freezing.
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