Discriminatory Opportunism
نویسندگان
چکیده
When can a firm cheat some individuals without damaging its reputation among others? We develop a model of discriminatory opportunism in which firms can treat all employees fairly, take advantage of all employees, or only take advantage of a subpopulation of employees. If employees believe that an act of opportunism against any employee portends opportunism against all employees, concern for reputation spillover causes firms to treat everyone identically. But when employees lack such “solidarity” beliefs, discriminatory opportunism can occur and is necessarily directed against the minority since minority employees are fewer and the benefits of a reputation for not exploiting them are correspondingly smaller. If some firms are not just opportunistic but are biased against the minority, other non-biased firms will also exploit the minority, ensuring a discrimination equilibrium. When employees vary along multiple dimensions, we find that discrimination occurs along the dimension in which some firms are biased. Regarding anti-discrimination policies, penalties against firms that are fair toward one group but opportunistic toward the other are particularly effective at reducing total opportunism in society. JEL Classification Categories: J71, J24, D63, L14.
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