Attentional role of quota implementation

0546177 - NHÚ 2022 RIV US eng J - Journal Article
Matveenko, Andrei - Mikhalishchev, Sergei
Attentional role of quota implementation.
Journal of Economic Theory. Roč. 198, December (2021), č. článku 105356. ISSN 0022-0531. E-ISSN 1095-7235
EU Projects: European Commission(XE) 678081 - INATTENTION
Institutional support: RVO:67985998
Keywords : discrete choice * rational inattention * multinomial logit
OECD category: Economic Theory
Impact factor: 1.790, year: 2021
Method of publishing: Open access
https://doi.org/10.1016/j.jet.2021.105356

In this paper, we introduce a new role of quotas, e.g. labor market quotas: the attentional role. We study the effect of quota implementation on the attention allocation strategy of a rationally inattentive (RI) manager. We find that quotas induce attention: a RI manager who is forced to fulfill a quota, unlike an unrestricted RI manager, never rejects minority candidates without acquiring information about them. We also demonstrate that in our model quotas are behaviorally equivalent to subsidies. In addition, we analyze different goals that the social planner can achieve by implementing quotas. First, quotas can eliminate statistical discrimination, i.e. make the chances of being hired independent from the group identity. Second, when the hiring manager has inaccurate beliefs about the distribution of candidates' productivities, the social planner can make the manager behave as if she has correct beliefs. Finally, we show how our results can be used to set a quota level that increases the expected value of the chosen candidates.
Permanent Link: http://hdl.handle.net/11104/0322717