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Opportunistic discrimination

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  • Harbaugh, Rick
  • To, Ted

Abstract

Are minorities more vulnerable to opportunism? We find that individuals from a minority group face greater danger of being cheated because trade with them is less frequent and the value of a reputation for fairness toward them is correspondingly smaller. When the majority is sufficiently large it can only lose from a solidarity strategy of punishing opportunism against the minority, so a firm that cheats the minority can still continue business as usual with the majority. If there is a small chance that a firm might have an implicit or preference bias against either group, then the interaction with reputational incentives gives unbiased firms an incentive to cheat the minority but not the majority. The prediction that smaller groups are more susceptible to discrimination distinguishes the model from most other discrimination models.

Suggested Citation

  • Harbaugh, Rick & To, Ted, 2014. "Opportunistic discrimination," European Economic Review, Elsevier, vol. 66(C), pages 192-204.
  • Handle: RePEc:eee:eecrev:v:66:y:2014:i:c:p:192-204
    DOI: 10.1016/j.euroecorev.2013.11.012
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    Cited by:

    1. Dewan, Torun & Wolton, Stephane, 2019. "A Political Economy of Social Discrimination," MPRA Paper 94394, University Library of Munich, Germany.
    2. Mateos de Cabo, Ruth & Gimeno, Ricardo, 2017. "Jobs for the Boys? Exploring gender biased director’s selection," Economics Letters, Elsevier, vol. 161(C), pages 82-85.
    3. Stijn Baert & Ann-Sophie De Pauw & Nick Deschacht, 2016. "Do Employer Preferences Contribute to Sticky Floors?," ILR Review, Cornell University, ILR School, vol. 69(3), pages 714-736, May.

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    More about this item

    Keywords

    Discrimination; Trust; Social capital; Implicit bias; Reputation spillover;
    All these keywords.

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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