Article | Business Ethics Quarterly | 2010

The Price of Equality: Suboptimal Resource Allocations across Social Categories

by Stephen M. Garcia, Max Bazerman, Shirli Kopelman, Avishalom Tor and Dale T. Miller

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. 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; Resource Allocation; Societal Protocols; Profit; Decision Making; Prejudice and Bias; Market Transactions; Ethics; Power and Influence; Distribution; Organizations;

Citation:

Garcia, Stephen M., Max Bazerman, Shirli Kopelman, Avishalom Tor, and Dale T. Miller. "The Price of Equality: Suboptimal Resource Allocations across Social Categories." Special Issue on Behavioral Ethics: A New Empirical Perspective on Business Ethics Research. Business Ethics Quarterly 20, no. 1 (2010): 75–88.