| Business Ethics Quarterly
The Price of Equality: Suboptimal Resource Allocations across Social Categories
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. Studies 1 and 2 show 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 demonstrates 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 shows 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.
Keywords: Equality and Inequality;
Prejudice and Bias;
Power and Influence;