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Competing for talents

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  • Damiano, Ettore
  • Li, Hao
  • Suen, Wing

Abstract

Two organizations compete for high quality agents from a fixed population of heterogeneous qualities by designing how to distribute their resources among members according to their quality ranking. The peer effect induces both organizations to spend the bulk of their resources on higher ranks in an attempt to attract top talents that benefit the rest of their membership. Equilibrium is asymmetric, with the organization with a lower average quality offering steeper increases in resources per rank. High quality agents are present in both organizations, while low quality agents receive no resources from either organization and are segregated by quality into the two organizations. A stronger peer effect increases the competition for high quality agents, resulting in both organizations concentrating their resources on fewer ranks with steeper increases in resources per rank, and yields a greater equilibrium difference in average quality between the two organizations.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 147 (2012)
Issue (Month): 6 ()
Pages: 2190-2219

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Handle: RePEc:eee:jetheo:v:147:y:2012:i:6:p:2190-2219

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Web page: http://www.elsevier.com/locate/inca/622869

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Keywords: Peer effect; Resource distribution; Sorting; Organization competition;

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References

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  1. Andrew Postlewaite, . ""The Social Basis of Interdependent Preferences''," CARESS Working Papres 97-14, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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  7. Bruce Sacerdote, 2000. "Peer Effects with Random Assignment: Results for Dartmouth Roommates," NBER Working Papers 7469, National Bureau of Economic Research, Inc.
  8. de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February.
  9. Ettore Damiano & Hao Li & Wing Suen, 2004. "First in Village or Second in Rome," Working Papers tecipa-221, University of Toronto, Department of Economics.
  10. Epple, Dennis & Romano, Richard E, 1998. "Competition between Private and Public Schools, Vouchers, and Peer-Group Effects," American Economic Review, American Economic Association, vol. 88(1), pages 33-62, March.
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Cited by:
  1. Tomasz Kulisiewicz, 2013. "Redukcja obciążeń administracyjnych a wybrane zagadnienia informatyzacji administracji publicznej," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 29, pages 131-150.
  2. Jan Eeckhout, 2012. "Matching Information," 2012 Meeting Papers 835, Society for Economic Dynamics.

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