Suppose in a Department in a university there are two specializations, E and T.  The Department has openings coming up over time and must hire to fill the slot when it appears or let it lapse, perhaps with some chance of getting it the following year.

The Department can hire on the “best athlete” criterion: just choose the best candidates, regardless of specialization.  Or it could have a “Noah’s Ark” approach and let in one E specialist for each T specialist (perhaps this is done intertemporally if there are less than two slots/year).  Both approaches are used in hiring in practice.  How does the best approach depend on the environment?

To think this through, let’s suppose the Department uses the best athlete criterion.  There are two problems.  First, if specialty T has lower standards than specialty E, they will propose more candidates.  They may exaggerate their quality if it is hard to assess.  Or specialty T may simply want to increase in size – there will be more people to interact with, collaborate with etc.  How should specialty E respond?  They know that of they stick to their high standards, the Department will be swamped by Ts.  So, they lower their bar for hiring, reasoning that their candidate has to be better than the marginal candidate brought in by the Ts, a weaker criterion.  In other words, the best athlete hiring system leads to a “race to the bottom”.

Hiring by the Noah’s Ark system prevents this from happening.  The two groups might have different standards or want to empire build.  But the each group is not threatened by the other as their slots are safe.  This comes at a cost – if the fraction of good candidates in each field differs from the slot allocation in the Department, it will miss out on the best possible combination of hires.  So, if the corporate culture is good enough and everyone internalizes the social welfare function, it is better to have the best athlete criterion.