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  • Ettore Damiano
  • Hao Li
  • Wing Suen

Abstract

Though individuals prefer to join groups with high quality peers, there are also advantages from being high up in the pecking order within the group. We show that sorting of agents in this environment results in an overlapping interval structure in the type space. Segregation and mixing coexist in a stable equilibrium. A greater degree of egalitarianism within organizations leads to greater segregation across organizations. Policies that are effective for lower-quality organizations to attract talent may be counterproductive for higher-quality organizations to retain talent. The degree and the pattern of segregation are shown to depend also on whether higher types are less concerned with relative ranking within the organization, on relative size of organizations, and on the extent of idiosyncratic preferences for other organizational attributes.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number tecipa-221.

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Length: pages
Date of creation: 11 Sep 2004
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Handle: RePEc:tor:tecipa:tecipa-221

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References

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  1. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
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  8. Kremer, M & Maskin, E, 1996. "Wage Inequality and Segregation by Skill," Working papers 96-23, Massachusetts Institute of Technology (MIT), Department of Economics.
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  11. Arnott, Richard & Rowse, John, 1987. "Peer group effects and educational attainment," Journal of Public Economics, Elsevier, vol. 32(3), pages 287-305, April.
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  13. 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.
  14. John Hartwick & Yoshitsugu Kanemoto, 1985. "Formation of Convoys, Tennis Ladders, Colleges and Related Groups," Working Papers 589, Queen's University, Department of Economics.
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Citations

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Cited by:
  1. Ettore Damiano & Hao Li & Wing Suen, 2006. "Competing for Talents," Departmental Working Papers _177, Chinese University of Hong Kong, Department of Economics.
  2. Prüfer, J. & Walz, U., 2013. "Academic faculty governance and recruitment decisions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5117896, Tilburg University.
  3. Alison Watts, 2007. "Formation of segregated and integrated groups," International Journal of Game Theory, Springer, vol. 35(4), pages 505-519, April.
  4. Andrea Craig & Marie-Louise Vierø, 2008. "Academia or the Private Sector? Sorting of Agents into Institutions and an Outside Sector," Working Papers 1198, Queen's University, Department of Economics.
  5. Ghazala Azmat & Marc Möller, 2012. "The distribution of talent across contests," Economics Working Papers 1298, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2013.
  6. Alison Watts, 2006. "Formation of Segregated and Integrated Groups," Working Papers 2006.127, Fondazione Eni Enrico Mattei.
  7. Salvador Barberà & Carmen Beviá & Clara Ponsatí, 2014. "Meritocracy, Egalitarianism and the Stability of Majoritarian Organizations," Working Papers 737, Barcelona Graduate School of Economics.

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