Discrimination in Organizations
In the paper, “Discrimination in Organizations”, I investigate incentives for unbiased behavior of discriminatory agents in hierarchical organizations. Existing research (e.g., Becker (1957), Coate and Loury (1993)) studies a situation in which an individual person practices discrimination. In contrast, I consider an environment where an agent subordinate to a principal (e.g., a manager and an owner respectively) attempts to discriminate, although the principal is unbiased and can suffer a loss whenever the agent discriminates (e.g., unfair treatment of minority workers). I derive the optimal contract that the principal can offer to the agent and show that it succeeds partially in deterring discrimination.
Another question, which I am analyzing, is whether or not a regulator (such as the EEOC in the case of employment discrimination) can improve compliance with non-discriminatory conduct, despite the fact that the person on whom the regulation is directly incident—that is, the principal—is not intrinsically biased. In further research, I anticipate studying the practical implications for policy of the reality that regulation is incident on hierarchical organizations rather than on autonomous individual agents.