Working Paper: NBER ID: w11213
Authors: Suzanne Scotchmer
Abstract: If promotion in a hierarchy is based on a random signal of ability, rates of promotion will be affected by risk-taking. Further, the numbers and abilities of risk-takers and non-risk-takers will be different at each stage of the hierarchy, and the ratio will be changing. I show that, under mild conditions, more risk-takers than non-risk-takers will survive at early stages, but they will have lower ability. At later stages, this will be reversed: Fewer risk-takers than non-risk-takers survive, but they will have higher ability. I give several interpretations for how these theorems relate to affirmative action, in light of considerable evidence that males are more risk-taking than females.
Keywords: No keywords provided
JEL Codes: J7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| more risktakers (D81) | survive at early stages of hierarchy (D73) |
| lower ability on average (D29) | more risktakers survive (D81) |
| cumulative elimination process (C22) | fewer risktakers survive (D81) |
| higher ability (D29) | risktakers remain in hierarchy (D81) |