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  • Business Ethics Quarterly

The Price of Equality: Suboptimal Resource Allocations across Social Categories

By: Stephen M. Garcia, Max Bazerman, Shirli Kopelman, Avishalom Tor and Dale T. Miller
  • Format:Print
  • | Pages:14
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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 (January 2010): 75–88.
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About The Author

Max H. Bazerman

Negotiation, Organizations & Markets
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