Does Affirmative Action Reduce Effort Incentives? A
Contest Game Analysis1
Jorg Franke§
July 31, 2007
Abstract
In this paper a contest game with heterogeneous players is analyzed in which hetero-
geneity could be the consequence of past discrimination. Based on the normative
perception of the heterogeneity there are two policy options to tackle this hetero-
geneity: either it is ignored and the contestants are treated equally, or affirmative
action is implemented which compensates discriminated players. The consequences
of these two policy options are analyzed for a simple two-person contest game and it
is shown that the frequently criticized trade-off between affirmative action and total
effort does not exist: Instead, affirmative action fosters effort incentives. A general-
ization to the n-person case and to a case with a partially informed contest designer
yields the same result if the participation level is similar under each policy.
Keywords : Asymmetric contest; affirmative action; discrimination
JEL classification : C72; D63; I38; J78
H would like to thank Carmen Bevia for advice and numerous discussions. I also benefited from
several discussions with Caterina Calsamiglia and Miguel Angel Ballester, and from comments
by Jordi Caballe, Luis Corchon, Matthias Dahm, Marta Ibarz, Pedro Rey, Hans Zenger, and
participants at several conferences and seminars. Financial support from the Spanish Ministry
of Education and Science through grant SEJ2005-01481/ECON and FEDER, from Generalitat
de Catalunya through grant 2005SGR00454, and from Universitat Autonoma de Barcelona is
gratefully acknowledged.
§Universitat Autonoma de Barcelona, ES-08193 Bellaterra, Spain. Email: [email protected]