The argument behind this statement is that "A players" are secure in their ability and want equal peers they can learn from, so they hire people as good as they are, while "B players" are fundamentally insecure and will hire "C players" who aren't really a challenge to them.

There are a million problems with this logic, but first among them is that A and B players know what they are and that their level of security (or insecurity) is equal to their actual ability. It's not really true.