Affirmative action in winner-take-all markets
Whom to hire, promote, admit into elite universities, elect, or issue government contracts to are all determined in a tournament-like (winner-take-all) structure. This paper constructs a simple model of pair-wise tournament competition to investigate affirmative action in these markets. We consider two forms of affirmative action: group-sighted, where employers are allowed to use group identity in pursuit of their diversity goals; and group-blind, where they are not. It is shown that the equilibrium group-sighted affirmative action scheme involves a constant handicap given to agents in the disadvantaged group. Equilibrium group-blind affirmative action creates a unique semi-separating equilibrium in which a large pool of contestants exerts zero effort, and this pool is increasing in the aggresiveness of the affirmative action mandate.
Key wordsaffirmative action discrimination tournaments
Unable to display preview. Download preview PDF.
- 1.Akerlof, G.: The economics of tagging as applied to optimal income tax, welfare programs, and manpower planning, American Economic Review 68(1) (1978), 8–19.Google Scholar
- 2.Cho, I.-K. and Kreps, D.: Signaling games and stable Equilibria, Quarterly Journal of Economics 102 (1987 May), 179–221.Google Scholar
- 4.Lazear, E.P. and Rosen, S.: Rank order tournaments as optimum labor contracts, Journal Political Economy 89 (1981 October), 861–864.Google Scholar
- 7.Rosen, S.: Prizes and incentives in elimination tournaments, American Economic Review 76 (1986 September), 701–715.Google Scholar