When merging 2 records, the winning record is determined based on which was selected first in the list before choosing the Merge action. (See the last note on the "Find and Merge Duplicate People" page of Marketo Help.)
It would be really helpful if on the Merge People pop-up screen, the winning record was visually indicated, and there was a way to select/change which record should be the winning record. Picking the correct record as winner is important as it determines the value of some of the standard fields, like "Created At", and it also determines whether custom object values are preserved or dropped.
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