Economists have developed theoretical models identifying self-fulfilling expectations as an important source of statistical discrimination practices in labor markets (Arrow, 1973). The static models dominating the literature of statistical discrimination, however, may leave the false impression...

Previous studies find that some social groups are stuck in poverty traps because of network effects. However, these studies do not carefully analyze how these groups overcome low human capital investment activities. Unlike previous studies, the model in this paper includes network externalities...

For more than three decades, critics and supporters of affirmative action have fought for the moral high ground -- through ballot initiatives and lawsuits, in state legislatures, and in varied courts of public opinion. The goal of this paper is to show the clarifying power of economic reasoning...

This paper constructs a simple model of pair-wise tournament competition to investigate categorical redistribution in winner-take-all markets. We consider two forms of redistribution: category-sighted, where employers are allowed to use categorical information in pursuit of their redistributive...

This paper presents a conceptual framework for understanding the consequences of the widespread adoption of race-neutral alternatives' to conventional racial affirmative action policies in college admissions. A simple model of applicant competition with endogenous effort is utilized to show...

Affirmative action policies are practiced around the world. This paper explores the welfare economics of such policies. A model is proposed where heterogeneous agents, distinguished by skill level and social identity, compete for positions in a hierarchy. The problem of designing an efficient...