Complementarity exacerbates discrimination
Working Papers from Grenoble Applied Economics Laboratory (GAEL)
We consider a manager who has to assign two tasks to two employees. We exhibit equilibria where the manager has an incentive to discriminate in favor of one of the employees. We show that the more complementary the tasks are, the more discriminatory the assignment is. We establish the efficiency of the discrimination considered, assuming enough complementarity between tasks. In support of empirical studies, we point out for instance the discrimination between immigrant and native workers, or the efficiency of seniority based promotion rules. Basically, the mechanism is that discrimination permits to withhold information, thereby reducing the difference of employees' perception of their ability.
Keywords: DISCRIMINATION; FACTOR SUBSTITUTION; CONFIDENCE MANAGEMENT; BAYESIAN GAMES (search for similar items in EconPapers)
JEL-codes: D24 D82 J71 M51 M54 (search for similar items in EconPapers)
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