Attentional Role of Quota Implementation

Andrei Matveenko and Sergei Mikhalishchev

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: This paper introduces a new role of quotas, e.g., labor market quotas: the attentional role. We study the effect of quota implementation on the attention allocation strategy of a rationally inattentive (RI) agent. Our main result is that a RI agent who is forced to fulfill a quota never hires the candidates without acquiring information about them, unlike an unrestricted RI agent who in some cases bases her decision on prior belief only. We also show that in our context quotas are equivalent to other types of affirmative policies such as subsidies and blind resume policy. We show how our results can be used to set a quota level that increases the expected value of the chosen candidate and also decreases statistical discrimination and discrimination in terms of how much attention is paid to each applicant. At the same time, quota implementation could be destructive if the social planner has imperfect information about the parameters of the model.

Keywords: discrete choice; rational inattention; multinomial logit; quotas (search for similar items in EconPapers)
JEL-codes: D63 D81 D83 H23 J08 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-lab, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Journal Article: Attentional role of quota implementation (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cer:papers:wp645

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