Selecting the Best: The Persistent Effects of Luck
Mikhail Drugov, Margaret Meyer, and Marc Möller
CEPR Discussion Paper 19309
How relevant is luck, as opposed to merit, for individual success? We argue that initial luck has a persistent effect on final career outcomes because organizations bias their selection of the most able agents in favor of early winners (e.g. through fast-tracks) even when performance is entirely random. Luck is most relevant in careers where agents are well informed about relative abilities and where performance-measurement is coarse. While agents’ competition amplifies persistence, it counteracts the accumulation of advantages associated with agents’ identities (e.g. gender). Identity-dependent biases (e.g. gender-specific grants) create incentives that make selection both more efficient and more equitable.
The Effect of Occupational Choice and Stereotypes on Labor Market Sorting
Oleg Muratov and Marc Möller
We incorporate competition for jobs into an assignment model to investigate the implications of occupational choice for the matching between heterogeneous workers and jobs of differing quality. When occupational choice is without frictions, more able workers choose more (costly) education and workers sort across occupations in a way that induces positive assortative matching. We characterize the distortions that arise when entry into an occupation is costly for a group of workers, e.g. due to the existence of stereotypes. The associated utility-loss is increasing with a worker’s ability because, although high-ability workers obtain jobs of similar quality as in the absence of stereotypes, competition for those jobs turns out to be stronger.
Common Ownership and Intertemporal Price Discrimination
Patrick Arnold, Marc Möller, and Makoto Watanabe
This paper considers the effects of common ownership on markets featuring intertemporal price discrimination (e.g. airline industry). We argue that allocation-effects, i.e. the effect of common ownership on the intertemporal allocation of sales, are key to understand whether common ownership is anti-competitive and whether price-dispersion can serve as a measure of competitive conduct. Our theory identifies advance purchase markets as a setting where common ownership can have positive effects on both welfare and consumer surplus.
Procuring New Ideas: The Value of Performance Information in Innovation Tournaments
Martina Bossard, Marc Möller, and Catherine Roux
Coming Soon!