A Sociological (De)Construction of the Relationship between Status and Quality

Lynn, Freda B.; Podolny, Joel M.; Lin, Tao

doi:10.1086/603537

Cited by 161 publications

(152 citation statements)

References 49 publications

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“…This research all suggests that the eventual performance distribution can reflect an exaggerated or even distorted initial skill or quality distribution due to luck (Lynn et al, 2009). Exceptional performers in these contexts should not necessarily impress us because the winners are likely to have enjoyed early luck of the draw and differences can be seen between alternative histories.…”

Section: Luck As Counterfactualmentioning

confidence: 82%

“…Explaining this asymmetry has important implications for organizational learning, executive compensation and responsibility allocation. Moreover, a common theme among these perspectives is that people's systematic underestimation of (good) luck tends to create a positive feedback loop for only a select few that end up taking all the credit for achievement, for having created opportunities and accumulating wealth even when undeserving (Bebchuk & Fried, 2009;Frank & Cook, 1995;Lynn, Podolny, & Tao, 2009). This suggests an underexplored perspective on luck as Leveler that might help attenuate such problems as exacerbating social inequality and unwarranted executive compensation.…”

Section: About Herementioning

confidence: 99%

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Good Night, and Good Luck: Perspectives on Luck in Management Scholarship

Liu

Rond

2016

The Academy of Management Annals

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It is not insignificant that seminal contributions to management scholarship have highlighted luck as an alternative explanation for performance differences between individuals and organizations. Yet it has rarely taken center-stage in scholarship. The principal purpose of this paper is to provide a systematic review of the application of luck in the management literature and in such foundation disciplines as economics, sociology, and psychology. Our analysis finds five common perspectives on luck: (a) luck as Attribution; (b) luck as Randomness; (c) luck as Counterfactual; (d) luck as Undeserved; and (e) luck as Serendipity. We outline various ways in which research on luck may be advanced along each of these perspectives, and develop an underexplored, sixth, perspective on (f) 'luck as Leveler' to provide a possible solution to such issues as social inequality and (unwarranted) executive compensation.

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Section: Luck As Counterfactualmentioning

confidence: 82%

Section: About Herementioning

confidence: 99%

Good Night, and Good Luck: Perspectives on Luck in Management Scholarship

Liu

Rond

2016

The Academy of Management Annals

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“…For example, individuals with early success might be given more resources and instruction, or consumers may favor products with a high market share (9,10). Prior research has shown how such processes can amplify chance events and produce a weak association between performance and ability (11)(12)(13), leading to a distribution of outcomes that is both unpredictable and highly unequal (14). In such settings, extreme success and failure are, at best, only weak signals of skill.…”

mentioning

confidence: 99%

Top performers are not the most impressive when extreme performance indicates unreliability

Denrell

Liu

2012

Proc. Natl. Acad. Sci. U.S.A.

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The relationship between performance and ability is a central concern in the social sciences: Are the most successful much more able than others, and are failures unskilled? Prior research has shown that noise and self-reinforcing dynamics make performance unpredictable and lead to a weak association between ability and performance. Here we show that the same mechanisms that generate unpredictability imply that extreme performances can be relatively uninformative about ability. As a result, the highest performers may not have the highest expected ability and should not be imitated or praised. We show that whether higher performance indicates higher ability depends on whether extreme performance could be achieved by skill or requires luck.regression to the mean | randomness | social learning | performance evaluation | ecological rationality E xtreme performance attracts people's attention. People tend to believe the most successful are the most skillful and that failures lack skill (1, 2). A tendency to imitate the most successful has also been argued to be a basic universal trait that is shaped by evolution and promotes adaptiveness (3, 4). However, is success necessarily an indication of skill and worthy of praise and imitation and failure an indication of lack of skill?Clearly, observed performance is not always a reliable indicator of skill. Chance events outside the control of individuals often influence performance (5-7). Moreover, such chance events rarely average out over time. Instead, due to "rich-get-richer" dynamics and "Matthew effects" (8), success usually breeds success and failure breeds failure. For example, individuals with early success might be given more resources and instruction, or consumers may favor products with a high market share (9, 10). Prior research has shown how such processes can amplify chance events and produce a weak association between performance and ability (11-13), leading to a distribution of outcomes that is both unpredictable and highly unequal (14). In such settings, extreme success and failure are, at best, only weak signals of skill. The highest performers may be more able than others and the lowest performers less able than others, but one should not expect their skill level to be very far from the mean (15).These prior contributions show that performance and skill may be weakly associated due to noise and rich-get-richer dynamics, but they do not challenge the idea that higher performers are likely more skilled and worthy of imitation. Even if the highest performers are only marginally more skilled than others, it makes sense to imitate them. In this paper, we show that noise and richget-richer dynamics can have more counterintuitive implications that go beyond the conventional understanding of regression to the mean. Noise and rich-get-richer dynamics not only introduce unpredictability but also change how much one can learn from extreme performances and whether higher performance indicates higher skill. In particular, we show that when noise and rich-getricher dy...

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“…The third condition, regarding the dependence of current performance on past performance, is relevant in economic and social systems in which there are strong path-dependencies (Merton, 1968;Lynn et al, 2009) such that high past performance makes future high performance more likely. For example, producers with a high market-share may, as a result of network externalities or social influence, be more likely to obtain a high market share in the future.…”

Section: Stock-market Returns Fit a T-distribution (Blattberg And Gonmentioning

confidence: 99%

When More Selection Is Worse

2017

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We demonstrate a paradox of selection: the average level of skill among the survivors of selection may initially increase but eventually decrease. This result occurs in a simple model in which performance is not frequency dependent, there are no delayed effects, and skill is unrelated to risktaking. The performance of an agent in any given period equals a skill component plus a noise term. We show that the average skill of survivors eventually decreases when the noise terms in consecutive periods are dependent and drawn from a distribution with a 'long' tail -a sub-class of heavy-tailed distribution. This result occurs because only agents with extremely high level of performance survive many periods and extreme performance is not diagnostic of high skill when the noise term is drawn from a long-tailed distribution.

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A Sociological (De)Construction of the Relationship between Status and Quality

Cited by 161 publications

References 49 publications

Good Night, and Good Luck: Perspectives on Luck in Management Scholarship

Good Night, and Good Luck: Perspectives on Luck in Management Scholarship

Top performers are not the most impressive when extreme performance indicates unreliability

When More Selection Is Worse

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