An information theory of efficient differential treatment

Temnyalov, E

An information theory of efficient differential treatment

Temnyalov, E

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Publisher:: American Economic Association
Publication Type:: Journal Article
Citation:: American Economic Journal: Microeconomics, 2023, 15, (1), pp. 323-358
Issue Date:: 2023-10-01

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Field	Value	Language
dc.contributor.author	Temnyalov, E https://orcid.org/0000-0002-1077-8196
dc.date.accessioned	2023-02-07T22:05:07Z
dc.date.available	2023-02-07T22:05:07Z
dc.date.issued	2023-10-01
dc.identifier.citation	American Economic Journal: Microeconomics, 2023, 15, (1), pp. 323-358
dc.identifier.issn	1945-7669
dc.identifier.issn	1945-7685
dc.identifier.uri	http://hdl.handle.net/10453/165973
dc.description.abstract	When are differential treatment policies—such as preferential treatment, affirmative action, and gender equity policies—justified by efficiency concerns? I propose a non-parametric assignment model where a policymaker assigns agents to different treatments or positions to maximize total surplus, based on the agents’ characteristics and on noisy information about their types. I provide necessary and sufficient conditions on the agents’ signal structures which characterize whether surplus maximization requires differential treatment or not, and study how the bias and informativeness of signal structures determine the efficiency implications of differential treatment. I examine implications of this model for inequality, decentralization and empirical work.
dc.language	en
dc.publisher	American Economic Association
dc.relation.ispartof	American Economic Journal: Microeconomics
dc.relation.isbasedon	10.1257/mic.20200400
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	14 Economics
dc.title	An information theory of efficient differential treatment
dc.type	Journal Article
utslib.citation.volume	15
utslib.for	14 Economics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access	*
pubs.consider-herdc	false
dc.date.updated	2023-02-07T22:05:05Z
pubs.issue	1
pubs.publication-status	Published online
pubs.volume	15
utslib.citation.issue	1

Abstract:

When are differential treatment policies—such as preferential treatment, affirmative action, and gender equity policies—justified by efficiency concerns? I propose a non-parametric assignment model where a policymaker assigns agents to different treatments or positions to maximize total surplus, based on the agents’ characteristics and on noisy information about their types. I provide necessary and sufficient conditions on the agents’ signal structures which characterize whether surplus maximization requires differential treatment or not, and study how the bias and informativeness of signal structures determine the efficiency implications of differential treatment. I examine implications of this model for inequality, decentralization and empirical work.

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http://hdl.handle.net/10453/165973