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The Price of Prejudice

  • Hedegaard, Morten
  • Tyran, Jean-Robert

We present a new type of field experiment to investigate ethnic prejudice in the workplace. Our design allows us to study how potential discriminators respond to changes in the cost of discrimination. We find that ethnic discrimination is common but remarkably responsive to the "price of prejudice", i.e. to the opportunity cost of choosing a less productive worker on ethnic grounds. In addition, we find that the standard theory of statistical discrimination fails to explain observed choices, and that taking ethnic prejudice into account helps to predict the incidence of discrimination.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 9953.

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Date of creation: Apr 2014
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Handle: RePEc:cpr:ceprdp:9953
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