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The Visible Hand: Race and Online Market Outcomes

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  • Jennifer L. Doleac

    ()
    (Department of Economics, Stanford University)

  • Luke C.D. Stein

    ()
    (Department of Economics, 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. To provide context, we also consider a group of sellers against whom buyers might statistically discriminate for similar reasons: white sellers with wrist tattoos. Black sellers do worse than white sellers on a variety of market outcome measures: They receive 13% fewer responses and 17% fewer offers. These effects are strongest in the Northeast, and are similar in magnitude to those associated with the display of a wrist tattoo. 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, consistent with channels through which we might expect statistical discrimination to operate.

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Bibliographic Info

Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 10-025.

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Date of creation: Apr 2011
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Handle: RePEc:sip:dpaper:10-025

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Keywords: race; advertising;

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References

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  1. 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.
  2. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
  3. 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.
  4. John List, 2004. "The nature and extent of discrimination in the marketplace: Evidence from the field," Natural Field Experiments 00299, The Field Experiments Website.
  5. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, February.
  6. 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.
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Cited by:
  1. repec:hal:cesptp:hal-00745109 is not listed on IDEAS
  2. 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.
  3. Benjamin Edelman & Micahel Luca, 2014. "Digital Discrimination: The Case of Airbnb.com," Harvard Business School Working Papers 14-054, Harvard Business School.
  4. 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.
  5. 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.
  6. Michael Ewens & Bryan Tomlin & Liang Choon Wang, 2012. "Statistical Discrimination or Prejudice? A Large Sample Field Experiment," Development Research Unit Working Paper Series 23-12, Monash University, Department of Economics.
  7. 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.
  8. Morten Hedegaard & Jean-Robert Tyran, 2014. "The Price of Prejudice," Discussion Papers 14-05, University of Copenhagen. Department of Economics.
  9. 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.
  10. 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).
  11. repec:hal:journl:hal-00745109 is not listed on IDEAS

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