You also don't know how you stack up in the tournament. The people entering graduate school have usually done really well in undergrad. However, being in the top 1% (or whatever) of that small pool provides you with a lot less information than you'd think about your prospects in a pool of people who were also in the top 1% of their own undergrad classes.

Repeat for grad school->postdoc, postdoc->tenure track, and so on.