Implicit Quotas∗RolandG.Fryer,Jr.HarvardUniversityandNBERAbstractEmploymentoradmission“goals”areoftenpreferredtoaffirmativeactionasawayofobtain-ingdiversity. Byconstructingasimplemodelofemployer-auditorinteraction,itisshownthatwhenanauditorhasimperfectinformationregardingemployers’proclivitiestodiscriminateandthefractionofqualifiedminoritiesineachemployersapplicantpool,goalsaresynonymouswithquotas. Technicallyspeaking,anyequilibriumoftheauditinggameinvolvesanon-emptysetofemployersthat hire so thatthey donottrigger an audit byrejecting qualified non-minorities,hiringunqualifiedminorities,orboth. Further,undersomeassumptions,explicitquotas(thosemandatedbyanauditor)aremoreefficientthanimplicitquotas(goalssettleduponinequilib-riumbyemployerswishingtoavoidanaudit).∗FryerisaProfessorofEconomicsatHarvardUniveristyand FacultyResearch Fellow attheNationalBureauofEconomic Research (NBER). Correspondence can be addressed to: Department of Economics, Harvard University;1805CambridgeStreet;Cambridge,MA 02138. E-mail: rfryer@fas.harvard.edu.IwouldliketothankLavoneNorwood,CorporateExecutiveDirectorofEmployeeRelations,forextensivediscussionsonauditingprocesses,MaryLeone,DirectorofEqualEmploymentOpportunity/AffirmativeActioncompliance,andseveral anonymous employers for helpful suggestions. I would also like to thank Gary Becker, Kalyan Chatterjee,Tom Gresik, Nezih Guner, James Heckman, Tony Kwasnica, Steve Levitt, Glenn Loury, Phil Reny, David Shapiro,TomasSjöström,LarsStole ...