A game theory analysis of dual discrimination

Abstract

A series of experiments with undergraduate management students was conducted to examine the behavioral effects of situations with dual discrimination in an incentive compensation scheme. Subjects were randomly assigned to a disadvantaged or advantaged status and simultaneously were discriminated for or against, in a two-person tournament. A game theoretic model was used to predict the choices subjects in the two conditions of dual discrimination would make if they attempted to maximize monetary outcomes. Results indicated that while the theory of tournaments was capable of predicting the pattern of results, subjects tended to expend more effort than predicted. The implications of these results for the theory and for public policy are discussed.