Effects of Quota Requirements on Incentives and Beliefs

Employers' beliefs and workers' incentives are jointly determined by quota requirements. Employers might hold pessimistic beliefs about certain populations but still hire them to meet quotas, resulting in lowered standards and potentially reducing incentives for those populations. Lowering standards for different groups can create disparities in effort and outcomes, leading to a patronizing equilibrium where individuals from certain populations may not feel the need to exert as much effort to achieve the same outcomes.