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Information-based discrimination

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  • Utgoff, Naomi M.

Abstract

The distribution of a single college’s incoming freshman cohort by high school of origin differs from the population distribution of high school seniors (Bernhard, 2013), a fact typically attributed to taste-based or statistical discrimination. This paper models a third explanation which I call information-based discrimination: information asymmetries between a college and high schools incentivize the formation of a relationship between the college and one ex ante randomly selected high school, resulting in de facto discriminatory admissions even in the absence of taste-based and statistical discrimination. I construct an admissions game between one college and N identical in expectation high schools. The game features a perfect Bayesian equilibrium in which the ex ante randomly chosen high school provides truthful information to the college in exchange for future favorable admission treatment. When agents are sufficiently patient, this relationship between the college and the initially randomly chosen high school is sustained in equilibrium. This equilibrium increases overall admissions efficiency relative to but does not Pareto improve on a dominant strategy implementable alternative: the welfare gains accrue entirely to the college and high school in the relationship while harming students from all other high schools.

Suggested Citation

  • Utgoff, Naomi M., 2025. "Information-based discrimination," Mathematical Social Sciences, Elsevier, vol. 134(C), pages 20-30.
    • Handle: RePEc:eee:matsoc:v:134:y:2025:i:c:p:20-30
    DOI: 10.1016/j.mathsocsci.2025.01.001
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    References listed on IDEAS

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    More about this item

    Keywords

    Relational contracts; Market design; Discrimination;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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