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Costless discrimination and unequal achievements in a labour market experiment

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  • Antonio FILIPPIN

    ()

  • Francesco GUALA

    ()

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 Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2011-30.

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Date of creation: 30 Nov 2011
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Handle: RePEc:mil:wpdepa:2011-30

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Keywords: Discrimination; tournament; groups; experiment;

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  1. Filippin, Antonio, 2003. "Discrimination and Workers' Expectations," IZA Discussion Papers 823, Institute for the Study of Labor (IZA).
  2. Davis, Douglas D., 1987. "Maximal quality selection and discrimination in employment," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 97-112, March.
  3. Hanming Fang & Andrea Moro, 2010. "Theories of Statistical Discrimination and Affirmative Action: A Survey," NBER Working Papers 15860, National Bureau of Economic Research, Inc.
  4. Filippin, Antonio, 2009. "Can Workers' Expectations Account for the Persistence of Discrimination?," IZA Discussion Papers 4490, Institute for the Study of Labor (IZA).
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