Are the Highest Performers the Most Impressive

Time, Date, Venue

16 March 2011, Wednesday 12:15 - 13:30 

University College London

1st floor Exec-ed room, Engineering Front Building
("Malet place" in Google maps)

Abstract

The relation between performance and ability is a central concern in discussions of imitation and learning - should we imitate and learn from the highest performers? Past research has illustrated how social mechanisms, combined with noise, can produce a weak or even non-existent association between performance and ability. The implication is that even high performance may not tell us much about the ability of the agent. Still, if performance and ability are positively correlated, it makes sense to imitate the highest performers. In this paper we point to a different effect of noise. We show that high levels of noise can in fact lead to a negative association between performance and ability for high levels of performance. The implication is that the highest performers are not the most impressive - instead, agents with moderately high performance are expected to have the highest ability. We first demonstrate how this conclusion can be derived from a formal model. We then illustrate that the basic results are consistent with the game results of the U.S. Major Baseball League between 2000-09. Our findings imply alternative explanations and predictions for three phenomena: management fashion, post-hiring surprise, and the fast fading of dominant firms.

Biography

(www.jesus.ox.ac.uk/fellows-and-staff/fellows/dr-chengwei-liu)

Chengwei is currently a Junior Research Fellow in Management at Jesus College Oxford, and he holds Chiang Ching-kuo Foundation 2010/11 Research Fellowship in Social Science (Taiwan). Before finishing his PhD at Cambridge Judge Business School in 2010, Chengwei worked as a business consultant in Asia. One of the papers of his PhD research: 'Luck, Counterfactual Thinking, and Entrepreneurial Cognition' was awarded ‘The Most Promising Paper in Behavioral Strategy’ at the 2010 Academy of Management Conference. Chengwei taught undergraduate and MBA courses in Cambridge and received ‘The Best Presenter Award’ at Sidney Sussex College in 2007. He was elected as student representative at Cambridge in 2006-08. He is now working with Professor Jerker Denrell at Oxford Saïd Business School on when and why people are likely to mistake luck for skill and the implications of this on learning, risk-taking and policy-making.