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The Role of Selectivity in Hierarchical Social Systems

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  • Jose A. Garcia-Martinez

    ()
    (Departamento de Estudios Económicos y Financieros. Universidad Miguel Hernández)

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    Abstract

    We consider a selection process and a hierarchical institution in a dynamic model as in Harrington [3], where agents are "climbing the pyramid" in a rank-order contest based on the "up or out" policy. Agents are ranked according to the quality of their performances in a particular environment that they face in groups, and a fraction of the highest ranked agents are promoted. The size of this fraction characterizes the selectivity of the process, and we distinguish between local and global selectivity. We study the role of the degree of local and global selectivity in the dynamic process where agents' types differ in their expected performances. Surprisingly, we find that an increase in the selectivity of the process can be detrimental to the agents with the highest expected performances. In fact, it does not matter how small the expected performance of a particular type of agent is. If the degree of selectivity is high enough, that type of agent will survive. However, if the selectivity decreases, the only survivor is the agent with the highest expected performance.

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    File URL: http://webdeptos.uma.es/THEconomica/malagawpseries/Papers/METCwp2010-5.pdf
    File Function: First version, 2010
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    Bibliographic Info

    Paper provided by Universidad de Málaga, Department of Economic Theory, Málaga Economic Theory Research Center in its series Working Papers with number 2010-05.

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    Date of creation: Jul 2010
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    Handle: RePEc:mal:wpaper:2010-5

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    Keywords: Social hierarchy; Selection; Selectivity; Promotion;

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    1. Alos-Ferrer, C., 1998. "Dynamic Systems with a Continuum of Randomly Matched Agents," Papers 9801, Washington St. Louis - School of Business and Political Economy.
    2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October.
    3. Joseph E Harrington Jr, 1999. "The Equilibrium Level of Rigidity in a Hierarchy," Economics Working Paper Archive 398, The Johns Hopkins University,Department of Economics.
    4. Joseph E. Harrington & Jr., 1999. "Rigidity of Social Systems," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 40-64, February.
    5. Sherwin Rosen, 1985. "Prizes and Incentives in Elimination Tournaments," NBER Working Papers 1668, National Bureau of Economic Research, Inc.
    6. Joseph E. Harrington Jr., 2000. "Progressive ambition, electoral selection, and the creation of ideologues," Economics of Governance, Springer, vol. 1(1), pages 13-23, 03.
    7. Vega-Redondo, Fernando, 2000. "Unfolding Social Hierarchies," Journal of Economic Theory, Elsevier, vol. 90(2), pages 177-203, February.
    8. Harrington, Joseph E, Jr, 1998. "The Social Selection of Flexible and Rigid Agents," American Economic Review, American Economic Association, vol. 88(1), pages 63-82, March.
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