The Downside of Ranking Systems: Qualified Contenders May Quit

Abstract

Ranking systems may deter qualified but lower ranked contenders from persisting or re-entering competitions (“ranking effect”). Using archival data from the U.S. Primary elections to the House of Representatives, we find that ranking one position lower is associated with a 22% decrease in the likelihood of the candidate running again in the next electoral cycle, even after controlling for differences in the percentage of votes, the level of funding and other potential confounders. Experimental evidence confirms that lower rankings, even when performance is similar to that of higher ranked contenders, undermines confidence in future success, discouraging lower ranked individuals from re-entering competitions. We extend the prior research that has focused on the positive consequences of ranking systems and show that rankings can have detrimental consequences for retaining talent. If ranking systems discourage competent and talented individuals from re-entering competitions, this could lead to significant losses for both individuals and organizations.