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The effects of information and competition on racial discrimination: Evidence from a field experiment

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  • Nunley, John M.
  • Owens, Mark F.
  • Howard, R. Stephen

Abstract

We study racial discrimination by simultaneously selling identical products on eBay in pairs of auctions posted under different racially identifying names. We detect significant price differences, which are indicative of in-group biases. White names receive higher prices for distinctively white products, and black names receive higher prices for distinctively black products. But price differences only emerge for sellers who have low eBay feedback scores in less competitive markets. Because the price differences dissipate as sellers accumulate credible reputations, the patterns in the data are indicative of statistical discrimination. Overall, the results suggest that mechanisms designed to reduce informational asymmetries and increased competition are both effective at reducing discrimination in online auctions.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:jeborg:v:80:y:2011:i:3:p:670-679
    DOI: 10.1016/j.jebo.2011.06.028
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ian Ayres & Mahzarin Banaji & Christine Jolls, 2015. "Race effects on eBay," RAND Journal of Economics, RAND Corporation, vol. 46(4), pages 891-917, October.
    2. 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.
    3. Zussman, Asaf, 2016. "Conflict and the ethnic structure of the marketplace: Evidence from Israel," European Economic Review, Elsevier, vol. 90(C), pages 134-145.
    4. repec:eee:ecoedu:v:60:y:2017:i:c:p:86-96 is not listed on IDEAS
    5. Nunley John M. & Pugh Adam & Romero Nicholas & Seals R. Alan, 2015. "Racial Discrimination in the Labor Market for Recent College Graduates: Evidence from a Field Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1093-1125, July.
    6. Rich, Judy, 2014. "What Do Field Experiments of Discrimination in Markets Tell Us? A Meta Analysis of Studies Conducted since 2000," IZA Discussion Papers 8584, Institute for the Study of Labor (IZA).
    7. Michael Luca, 2017. "Designing Online Marketplaces: Trust and Reputation Mechanisms," Innovation Policy and the Economy, University of Chicago Press, vol. 17(1), pages 77-93.
    8. Tjaden, Jasper Dag & Schwemmer, Carsten & Khadjavi, Menusch, 2017. "Ride with me: Ethnic discrimination in social markets," Kiel Working Papers 2087, Kiel Institute for the World Economy (IfW).
    9. Avery, Derek R. & McKay, Patrick F. & Volpone, Sabrina D. & Malka, Ari, 2015. "Are companies beholden to bias? The impact of leader race on consumer purchasing behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 127(C), pages 85-102.
    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.

    More about this item

    Keywords

    Racial discrimination; Statistical discrimination; In-group bias; Asymmetric information; Field experiments; Competition; eBay;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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