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

Abstract

Though individuals prefer to join groups with high quality peers, there are also advantages from being high up in the pecking order within a 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. Since competition is most intense for agents with intermediate talent, effective personnel policies to attract talent differ systematically between high-quality and low-quality organizations. When transfers are possible our stable equilibrium corresponds to a competitive equilibrium but entails too little segregation compared to the efficient assignment.

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Bibliographic Info

Paper provided by Vancouver School of Economics in its series Microeconomics.ca working papers with number damiano-05-01-25-10-14-13.

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Length: 0 pages
Date of creation: 25 Jan 2005
Date of revision: 26 Jan 2005
Handle: RePEc:ubc:pmicro:damiano-05-01-25-10-14-13

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  12. Fernandez, Raquel & Rogerson, Richard, 1996. "Income Distribution, Communities, and the Quality of Public Education," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 135-64, February.
  13. J. Solnick, Sara & Hemenway, David, 1998. "Is more always better?: A survey on positional concerns," Journal of Economic Behavior & Organization, Elsevier, vol. 37(3), pages 373-383, November.
  14. 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.
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Cited by:
  1. Jens Prüfer & Uwe Walz, 2013. "Academic faculty governance and recruitment decisions," Public Choice, Springer, vol. 155(3), pages 507-529, June.
  2. Damiano, Ettore & Li, Hao & Suen, Wing, 2006. "Competing for Talents," Microeconomics.ca working papers damiano-06-01-17-02-01-48, Vancouver School of Economics, revised 17 Jan 2006.
  3. Salvador Barberà & Carmen Beviá & Clara Ponsatí, 2014. "Meritocracy, Egalitarianism and the Stability of Majoritarian Organizations," Working Papers 737, Barcelona Graduate School of Economics.
  4. Craig Andrea & Vierø Marie-Louise, 2013. "Academia or the Private Sector? Sorting of Agents into Institutions and an Outside Sector," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 13(1), pages 303-345, December.
  5. Alison Watts, 2006. "Formation of Segregated and Integrated Groups," Working Papers 2006.127, Fondazione Eni Enrico Mattei.
  6. Alison Watts, 2007. "Formation of segregated and integrated groups," International Journal of Game Theory, Springer, vol. 35(4), pages 505-519, April.
  7. Ghazala Azmat & Marc Möller, 2012. "The Distribution of Talent across Contests," Working Papers 600, Barcelona Graduate School of Economics.

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