Don't Demotivate, Discriminate

Tinbergen Institute Discussion Paper 14-017/VII

27 Pages Posted: 2 Feb 2014

See all articles by Jurjen J.A. Kamphorst

Jurjen J.A. Kamphorst

Erasmus University Rotterdam (EUR)

Otto H. Swank

Erasmus University Rotterdam - Department of Economics; Tinbergen Institute Rotterdam (TIR)

Date Written: December 20, 2013

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 non-discriminatory equilibrium is unstable. Yet the manager would prefer to commit not to discriminate.

Keywords: discrimination, confidence management, Bayesian games

JEL Classification: D82, J71, M51, M54

Suggested Citation

Kamphorst, Jurjen J.A. and Swank, Otto H., Don't Demotivate, Discriminate (December 20, 2013). Tinbergen Institute Discussion Paper 14-017/VII, Available at SSRN: https://ssrn.com/abstract=2388722 or http://dx.doi.org/10.2139/ssrn.2388722

Jurjen J.A. Kamphorst (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Otto H. Swank

Erasmus University Rotterdam - Department of Economics ( email )

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Tinbergen Institute Rotterdam (TIR)

P.O. Box 1738
3000 DR Rotterdam
Netherlands
+31 10 4081448 (Phone)
+31 10 2120551 (Fax)

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