How Costly is Diversity? Affirmative Action in Light of Gender Differences in Competitiveness PRELIMINARY

Recent research documents that while men are eager to compete, women often shy away from competitive environments. A consequence is that few women succeed in and win competitions. Using experimental methods we show that affirmative action entices women to compete. When a preference is given to getting women winners, more women and fewer men enter competitions, and the response exceeds that predicted by changes in the probability of winning. This change in behavior is in part explained by the fact that under affirmative action the probability of winning depends not only on one’s rank relative to other group members, but also on one’s rank within gender. Both beliefs on rank and attitudes towards competition change when moving to a within-gender competition. The changes in competitive entry have important implications when assessing the performance costs associated with affirmative action. Specifically it implies that the minimum performance threshold for female winners need not be lowered to the extent predicted based on ex-ante entry decisions. When initial competitive entry is not payoff maximizing, employers may not need to lower their performance requirement to achieve a more diverse set of winners Muriel Niederle: Department of Economics, Stanford University and NBER, http://www.stanford.edu/~niederle, Carmit Segal, Universitat Pompeu Fabra, and Lise Vesterlund: Department of Economics, University of Pittsburgh, http://www.pitt.edu/~vester. We are grateful to the NSF and the Harvard Business School for generous support. We thank the following institutions for their hospitality: Institute for Advanced Study at Princeton and the Department of Economics at Harvard (Niederle), Harvard Business School (Segal) and CEBR at Copenhagen Business School (Vesterlund).