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Costless Discrimination and Unequal Achievements in a Labour Market Experiment

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Author Info

  • Filippin, Antonio

    ()
    (University of Milan)

  • Guala, Francesco

    ()
    (University of Milan)

Abstract

We investigate the emergence of discrimination in an experiment where individuals affiliated to different groups compete for a monetary prize, submitting independent bids to an auctioneer. The auctioneer receives perfect information about the bids (i.e. there is no statistical discrimination), and she has no monetary incentive to favour the members of her own group (the bidders are symmetric). We observe nonetheless some discrimination by auctioneers, who tend to assign the prize more frequently to a member of their own group when two or more players put forward the highest bid. Out-group bidders react to this bias and reduce significantly their bids, causing an average decay of their earnings throughout the game, with cumulative effects that generate strongly unequal outcomes. Because the initial bias is costless, such mechanism can survive even in competitive market, providing a rationale for a well-known puzzle in the literature, i.e. the long-run persistence of discrimination.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6187.

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Length: 35 pages
Date of creation: Dec 2011
Date of revision:
Publication status: published in: Experimental Economics, 2013, 16(3), 285-305
Handle: RePEc:iza:izadps:dp6187

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Keywords: groups; tournament; discrimination; experiment;

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  1. Hanming Fang & Andrea Moro, 2010. "Theories of Statistical Discrimination and Affirmative Action: A Survey," NBER Working Papers 15860, National Bureau of Economic Research, Inc.
  2. Filippin, Antonio, 2003. "Discrimination and Workers' Expectations," Royal Economic Society Annual Conference 2003 78, Royal Economic Society.
  3. Filippin, Antonio, 2009. "Can Workers' Expectations Account for the Persistence of Discrimination?," IZA Discussion Papers 4490, Institute for the Study of Labor (IZA).
  4. Davis, Douglas D., 1987. "Maximal quality selection and discrimination in employment," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 97-112, March.
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Cited by:
  1. Merlino, Luca Paolo, 2012. "Discrimination, technology and unemployment," Labour Economics, Elsevier, vol. 19(4), pages 557-567.

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