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Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market

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  • Dickinson, David L.
  • Masclet, David
  • Peterle, Emmanuel

Abstract

We examine both the private benefits and spillover costs of labor market favoritism in a unique laboratory experiment design. Our data show that both employment preference and wage offers favor in-group members. Workers positively reciprocate towards in-group employers by choosing higher effort in a gift-exchange game. Thus, favoritism can be privately rational for employers. However, unemployed subjects are allowed to burn resources (at a cost to themselves), and we document significantly increased resource destruction when unemployment can be attributed to favoritism towards others. This highlights a significant spillover and often ignored cost of favoritism, and it points to one possible micro-foundation of some antisocial behavior.

Suggested Citation

  • Dickinson, David L. & Masclet, David & Peterle, Emmanuel, 2018. "Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market," European Economic Review, Elsevier, vol. 104(C), pages 220-236.
    • Handle: RePEc:eee:eecrev:v:104:y:2018:i:c:p:220-236
    DOI: 10.1016/j.euroecorev.2018.03.004
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    Cited by:

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    3. Élisabeth Tovar & Matthieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Working Papers hal-04141860, HAL.
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    5. Elisabeth Tovar & Mathieu Bunel, 2019. "Profit vs morality: how unfair is labor market discrimination? Results from a survey experiment," Post-Print hal-02459378, HAL.
    6. David MASCLET & David L. DICKINSON, 2024. "Incorporating Conditional Morality into Economic Decisions," Economics Working Paper Archive (University of Rennes & University of Caen) 2024-04, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    7. Fortuna Casoria & Ernesto Reuben & Christina Rott, 2022. "The Effect of Group Identity on Hiring Decisions with Incomplete Information," Management Science, INFORMS, vol. 68(8), pages 6336-6345, August.
    8. Schmidt, Robert J. & Trautmann, Stefan T., 2019. "Implementing (Un)fair Procedures? Favoritism and Process Fairness when Inequality is Inevitable," Other publications TiSEM 125472e2-51a2-4cf9-aab5-1, Tilburg University, School of Economics and Management.
    9. Sanjaya, Muhammad Ryan, 2023. "Antisocial behavior in experiments: What have we learned from the past two decades?," Research in Economics, Elsevier, vol. 77(1), pages 104-115.
    10. Ďuriník, Michal & Morita, Hodaka & Servátka, Maroš & Zhang, Le, 2023. "Promotions and Group Identity," MPRA Paper 119389, University Library of Munich, Germany.
    11. Alexandros Karakostas & Nhu Tran & Daniel John Zizzo, 2022. "Experimental Insights on Anti-Social Behavior: Two Meta-Analyses," Discussion Papers Series 658, School of Economics, University of Queensland, Australia.
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    13. Emanuela Ghignoni, 2017. "Who do you know or what do you know? Informal recruitment channels, family background and university enrolments," Working Papers in Public Economics 179, University of Rome La Sapienza, Department of Economics and Law.
    14. Urs Steiner Brandt & Gert Tinggaard Svendsen, 2019. "How robust is the welfare state when facing open borders? An evolutionary game-theoretic model," Public Choice, Springer, vol. 178(1), pages 179-195, January.

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    More about this item

    Keywords

    Discrimination; Experimental economics; Social identity; Conflict;
    All these keywords.

    JEL classification:

    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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