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Risk Taking and Gender in Hierarchies

  • Scotchmer, Suzanne

If promotion in a hierarchy is based on a random signal of ability, rates of promotion are affected by risk-taking. Further, the statistical properties of the surviving populations of risk-takers and non-risk-takers will be different, and will be changing throughout the hierarchy. I define promotion hierarchies with and without memory, where memory means that promotion depends on the entire history of success. In both types of hierarchies, surviving risk-takers have lower average ability than surviving non risk-takers at any stage where they have a higher probability of survival. However, that will not apply in the limit. With a common set of promotion standards, risk-takers will survive with lower probability than non risk-takers, and will have higher average ability. I give several interpretations for how these theorems relate to affirmative action, in light of considerable evidence that males are more risk-taking than females.

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Paper provided by Department of Economics, Institute for Business and Economic Research, UC Berkeley in its series Department of Economics, Working Paper Series with number qt2tm5m16f.

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Date of creation: 30 Jul 2006
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Handle: RePEc:cdl:econwp:qt2tm5m16f
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  1. Richard Startz & Lundberg, . "Private Discrimination and Social Intervention in Competitive Labor Markets," Rodney L. White Center for Financial Research Working Papers 19-81, Wharton School Rodney L. White Center for Financial Research.
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  12. Lundberg, Shelly J, 1991. "The Enforcement of Equal Opportunity Laws under Imperfect Information: Affirmative Action and Alternatives," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 309-26, February.
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