Risk Taking and Gender in Hierarchies

Theoretical Economics, Vol. 3, pp. 499-524, 2008

IEPR Research Paper

35 Pages Posted: 4 Aug 2006 Last revised: 26 May 2010

See all articles by Suzanne Scotchmer

Suzanne Scotchmer

University of California - Department of Economics (Deceased); University of California, Berkeley - School of Law; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: September 22, 2008

Abstract

In a labor market hierarchy, promotions are affected by the noisiness of information about the candidates. I study the hypothesis that males are more risk taking than females, and its implications for rates of promotion and abilities of survivors. 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, the surviving risk takers will have lower average ability whenever they have a higher survival rate. Further, even if more risk takers than non risk takers are promoted in the beginning of the hierarchy, that will be reversed over time. The risk takers will eventually have a lower survival rate, but higher ability. As a consequence of these differences, the various requirements of employment law cannot simultaneously be satisfied. Further, if promotion standards are chosen to maximize profit, the standards will reflect gender in ways that are difficult to distinguish from discriminatory intent.

Keywords: hierarchy, risk-taking,employment law,Labor markets, promotion, discrimination, affirmative action,, gender bias

JEL Classification: J7

Suggested Citation

Scotchmer, Suzanne, Risk Taking and Gender in Hierarchies (September 22, 2008). Theoretical Economics, Vol. 3, pp. 499-524, 2008, IEPR Research Paper, Available at SSRN: https://ssrn.com/abstract=921472

Suzanne Scotchmer (Contact Author)

University of California - Department of Economics (Deceased)

Berkeley, CA 94720-3880
United States

University of California, Berkeley - School of Law

215 Boalt Hall
Berkeley, CA 94720-7200
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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