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Don't Demotivate, Discriminate

Jurjen Kamphorst () and Otto H. Swank

American Economic Journal: Microeconomics, 2016, vol. 8, issue 1, 140-65

Abstract: This paper offers a new theory of discrimination in the workplace. We consider a manager who has to assign two tasks to two employees. The manager has superior information about the employees' abilities. We show that besides an equilibrium where the manager does not discriminate, equilibria exist where the manager discriminates in favor of the employee whom the employees expect to be favored. The manager, who has no taste for discrimination, discriminates in order to avoid demotivating the "favorite". We show that the nondiscriminatory equilibrium is unstable. Yet the manager would prefer to commit not to discriminate. (JEL D82, D84, J71, M12, M51, M54)

JEL-codes: D82 D84 J71 M12 M51 M54 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/mic.20140204
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