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The Visible Hand: Race and Online Market Outcomes

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  • Jennifer L. Doleac

    ()
    (Stanford University)

  • Luke C.D. Stein

    ()
    (Stanford University)

Abstract

We examine the effect of race on market outcomes by selling iPods through local online classified advertisements throughout the United States in a year-long field experiment. Each ad features a photograph of the product being held by a dark- or light-skinned (“black” or “white”) hand. Black sellers do worse than white sellers on a variety of market outcome measures: they receive 13% fewer responses and 17% fewer offers. Conditional on receiving at least one offer, black sellers also receive 2–4% lower offers, despite the selfselected—and presumably less biased—pool of buyers. In addition, buyers corresponding with black sellers exhibit lower trust: they are 17% less likely to include their name in e-mails, 44% less likely to accept delivery by mail, and 56% more likely to express concern about making a long-distance payment. We find evidence that black sellers suffer particularly poor outcomes in thin markets; it appears that discrimination may not “survive” in the presence of significant competition among buyers. Furthermore, black sellers do worst in the most racially isolated markets and markets with high property crime rates, suggesting a role for statistical discrimination in explaining the disparity.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 09-015.

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Date of creation: May 2010
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Handle: RePEc:sip:dpaper:09-015

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Keywords: advertising discrimination; race; marketing;

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References

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  1. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, February.
  2. John A. List, 2004. "The Nature and Extent of Discrimination in the Marketplace: Evidence from the Field," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 49-89, February.
  3. Marianne Bertrand & Sendhil Mullainathan, 2003. "Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," NBER Working Papers 9873, National Bureau of Economic Research, Inc.
  4. Nardinelli, Clark & Simon, Curtis, 1990. "Customer Racial Discrimination in the Market for Memorabilia: The Case of Baseball," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 575-95, August.
  5. Ayres, Ian & Siegelman, Peter, 1995. "Race and Gender Discrimination in Bargaining for a New Car," American Economic Review, American Economic Association, vol. 85(3), pages 304-21, June.
  6. John M. Nunley & Mark F. Owens & R. Stephen Howard, 2010. "The Effects of Competition and Information on Racial Discrimination: Evidence from a Field Experiment," Working Papers 201007, Middle Tennessee State University, Department of Economics and Finance.
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Cited by:
  1. Hedegaard, Morten & Tyran, Jean-Robert, 2014. "The Price of Prejudice," CEPR Discussion Papers 9953, C.E.P.R. Discussion Papers.
  2. repec:hal:journl:hal-00745109 is not listed on IDEAS
  3. Wojtek Przepiorka, 2012. "Ethnic discrimination and signals of trustworthiness in an online market: Evidence from two field experiments," Discussion Papers 2012002, University of Oxford, Nuffield College.
  4. Mujcic, Redzo & Frijters, Paul, 2013. "Still Not Allowed on the Bus: It Matters If You're Black or White!," IZA Discussion Papers 7300, Institute for the Study of Labor (IZA).
  5. Michael Ewens & Bryan Tomlin & Liang Choon Wang, 2014. "Statistical Discrimination or Prejudice? A Large Sample Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 119-134, March.
  6. Owan, Hideo & Tsuru, Tsuyoshi & Uehara, Katsuhito, 2012. "Seller-Buyer Ethnic Matches: The Case Of Car Transactions At Two North American Auto Dealerships," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 53(2), pages 217-236, December.
  7. von Essen, Emma & Karlsson, Jonas Karlsson, 2013. "A matter of transient anonymity: Discrimination by gender and foreignness in online auctions," Research Papers in Economics 2013:6, Stockholm University, Department of Economics.
  8. 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.
  9. Benjamin Edelman & Micahel Luca, 2014. "Digital Discrimination: The Case of Airbnb.com," Harvard Business School Working Papers 14-054, Harvard Business School.
  10. John M. Nunley & Adam Pugh & Nicholas Romero & Richard Alan Seals, Jr., 2014. "An Examination of Racial Discrimination in the Labor Market for Recent College Graduates: Estimates from the Field," Auburn Economics Working Paper Series auwp2014-06, Department of Economics, Auburn University.
  11. repec:hal:cesptp:hal-00745109 is not listed on IDEAS

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