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The Incentive Effects of Affirmative Action in a Real-Effort Tournament

Joint with Joerg Franke and Pedro Rey-Biel

Abstract: Affirmative action policies bias tournament rules in order to provide equal opportunities to a group of competitors who have a disadvantage they cannot be held responsible for. Its implementation affects the underlying incentive structure which might induce lower performance by participants, and additionally result in a selected pool of tournament winners that is less efficient. In this paper, we study the empirical validity of such concerns in the case where the disadvantage affects the capacity to compete. We conduct real-effort tournaments between pairs of children from two similar schools who systematically differ in how much training they received ex-ante in school on the task at hand. Our results show that the implementation of affirmative action did not result in lower performance for either advantaged or disadvantaged subjects. Additionally, while affirmative action balanced the proportion of disadvantaged individuals winning their respective tournament, the average performance of the pool of winners only decreased slightly.

[Paper in PDF]

Joint with Guillaume Haeringer and Flip Klijn

Accepted at the Journal of Economic Theory

Abstract: We show that one of the main results in Chen and Sonmez (J. Econ. Th., 2006, 2008) does no longer hold when the number of recombinations is sufficiently increased to obtain reliable conclusions. No school choice mechanism is significantly superior in terms of efficiency.

[Paper in PDF]

Joint with Guillaume Haeringer and Flip Klijn

American Economic Review Volume 100, Number 4, September 2011

Abstract: The literature on school choice assumes that families can submit a preference list over all the schools they want to be assigned to. However, in many real-life instances families are only allowed to submit a list containing a limited number of schools. Subjects' incentives are drastically affected, as more individuals manipulate their preferences. Including a safety school in the constrained list explains most manipulations. Competitiveness across schools play an important role. Constraining choices increases segregation and affects the stability and efficiency of the final allocation. Remarkably, the constraint reduces significantly the proportion of subjects playing a dominated strategy.

[Paper in PDF]

Decentralizing Equality of Opportunity

International Economic Review Volume 50, Number 1, February 2009

Abstract: In a global justice problem, equality of opportunity is satisfied if individual well-being is independent of exogenous irrelevant characteristics. Policymakers, however, address questions involving local justice problems. We interpret a collection of local justice problems as the decentralized global justice problem. We show that controlling for effort locally, which is not required by the global justice objective, is sufficient for decentralizing equality of opportunity. Moreover, under some conditions, equalizing rewards to effort is not only sufficient but necessary. This implies in particular that most affirmative action policies may not contribute to providing equality of opportunity since they do not control for effort.

[Paper in PDF]

Joint with Donald J. Brown

Economic Theory Volume 31, Number 1, April 2007

Abstract: Changes in total surplus are traditional measures of economic welfare. We propose necessary and sufficient conditions for rationalizing individual and aggregate consumer demand data with individual quasilinear and homothetic utility functions. Under these conditions, consumer surplus is a valid measure of consumer welfare. For nonmarketed goods, we propose necessary and sufficient conditions on input market data for efficient production, i.e. production at minimum cost. Under these conditions we derive a cost function for the nonmarketed good, where producer surplus is the area above the marginal cost curve.

[Paper in PDF]

Cowles Foundation Discussion Paper #1507, Cowles Foundation for Research in Economics, Yale University.

Joint with Donald J. Brown

Abstract: A demand function derives from maximizing a quasilinear concave utility function subject to a budget constraint if and only if the demand function is cyclically monotone. On finite data sets consisting of pairs of market prices and consumption vectors, this result is equivalent to a solution of the Afriat inequalities where all the marginal utilities of income are equal. We explore refutable implications of these results for Bewley's Marshallian reformulation of Friedman's Walrasian model of the permanent income hypothesis.

[Paper in PDF]

Cowles Foundation Discussion Paper #1399, Cowles Foundation for Research in Economics, Yale University.

Joint with Donald J. Brown

Abstract: In the empirical and theoretical literature a consumer's utility function is often assumed to be quasilinear. In this paper we provide necessary and sufficient conditions for testing if the consumer acts as if she is maximizing a quasilinear utility function over her budget set. If the consumer's choices are inconsistent with maximizing a quasilinear utility function over her budget set, then we compute the "best" quasilinear rationalization of her choices.

[Paper in PDF]

Cowles Foundation Discussion Paper #1399R, Cowles Foundation for Research in Economics, Yale University.

Abstract: This paper provides empirical evidence that suggests that variables present during the education process of an individual may affect his final school attainment. This is opposed to the hypothesis that characteristics present at very early stages, such as background or IQ, are the only determinants of the individuals later success in school.

This paper uses data from the National Child Development Survey (NCDS) of an entire cohort born in Britain in one week in 1958. We intend to question the fact that test scores at 7 being correlated with test scores at 16 implies that there is little in the education process between 7 and 16 that is going to affect final attainment. We want to suggest that factors affecting age 7 scores allow the individual to get a higher return from his education process at middle ages, say when he is 11, which will allow him to get a higher attainment at age 16.

[Paper in PDF]