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http://ssrn.com/abstract=1442078
 
 

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The Price of Equality: Suboptimal Resource Allocations Across Social Categories


Stephen M. Garcia


University of Michigan

Max H. Bazerman


Harvard Business School - Negotiations, Organizations and Markets Unit

Shirli Kopelman


University of Michigan, Stephen M. Ross School of Business

Avishalom Tor


Notre Dame Law School

Dale T. Miller


Stanford Graduate School of Business

July 31, 2009

Harvard PON Working Paper No. 1442078

Abstract:     
This paper explores the influence of social categories on the perceived trade-off between relatively bad but equal distribution of resources between two parties and profit maximizing, yet asymmetric payoffs. Study 1 and 2 showed that people prefer to maximize profits when interacting within their social category, but chose suboptimal individual and joint profits when interacting across social categories. Study 3 demonstrated that outside observers, who were not members of the focal social categories, also were less likely to maximize profits when resources were distributed across social category lines. Study 4 showed that the transaction utility of maximizing profits required greater compensation when resources were distributed across, in contrast to within social categories. We discuss the ethical implications of these decision making biases in the context of organizations.

Number of Pages in PDF File: 26

Keywords: Profit Maximization, Choice, Decision Making, Social Categories, Transaction Utility, Ethical Dilemmas

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Date posted: July 31, 2009 ; Last revised: September 29, 2011

Suggested Citation

Garcia, Stephen M. and Bazerman, Max H. and Kopelman, Shirli and Tor, Avishalom and Miller, Dale T., The Price of Equality: Suboptimal Resource Allocations Across Social Categories (July 31, 2009). Harvard PON Working Paper No. 1442078. Available at SSRN: http://ssrn.com/abstract=1442078 or http://dx.doi.org/10.2139/ssrn.1442078

Contact Information

Stephen M. Garcia (Contact Author)
University of Michigan ( email )
741 Dennison Hall
Ann Arbor, MI 48109
United States
734-615-2561 (Phone)
HOME PAGE: http://www.sitemaker.umich.edu/stephen.garcia
Max H. Bazerman
Harvard Business School - Negotiations, Organizations and Markets Unit ( email )
Soldiers Field
Boston, MA 02163
United States
617-495-6429 (Phone)
617-496-4191 (Fax)
HOME PAGE: http://www.people.hbs.edu/mbazerman
Shirli Kopelman
University of Michigan, Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
HOME PAGE: http://www.shirlikopelman.com
Avishalom Tor
Notre Dame Law School ( email )
P.O. Box 780
Notre Dame, IN 46556-0780
United States
Dale T. Miller
Stanford Graduate School of Business ( email )
518 Memorial Way
Stanford, CA 94305-5015
United States

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