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The effects of information and competition on racial discrimination: Evidence from a field experiment

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  • Nunley, John M.
  • Owens, Mark F.
  • Howard, R. Stephen

Abstract

We study racial discrimination by simultaneously selling identical products on eBay in pairs of auctions posted under different racially identifying names. We detect significant price differences, which are indicative of in-group biases. White names receive higher prices for distinctively white products, and black names receive higher prices for distinctively black products. But price differences only emerge for sellers who have low eBay feedback scores in less competitive markets. Because the price differences dissipate as sellers accumulate credible reputations, the patterns in the data are indicative of statistical discrimination. Overall, the results suggest that mechanisms designed to reduce informational asymmetries and increased competition are both effective at reducing discrimination in online auctions.

Suggested Citation

  • Nunley, John M. & Owens, Mark F. & Howard, R. Stephen, 2011. "The effects of information and competition on racial discrimination: Evidence from a field experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 670-679.
    • Handle: RePEc:eee:jeborg:v:80:y:2011:i:3:p:670-679
    DOI: 10.1016/j.jebo.2011.06.028
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    More about this item

    Keywords

    Racial discrimination; Statistical discrimination; In-group bias; Asymmetric information; Field experiments; Competition; eBay;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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