Contact and the Price of Prejudice

People pay to discriminate. We replicate the price-of-prejudice paradigm of Hedegaard and Tyran (2018) in Japan and test whether brief cooperative contact with an outgroup member reduces the willingness to pay (WTP) for same-ethnicity coworkers. In a pre-registered laboratory experiment at the University of Osaka (N = 164 Japanese subjects), participants first performed a real-effort task, were then randomly paired with either a Japanese or an international student for a joint production round, and finally made incentivized binary choices between future partners whose name and productivity were revealed. Discrimination is clear in the data: one half of subjects choose the Japanese partner strictly more than 50% of the time in productivity-symmetric choices, and the average subject forgoes a productivity advantage of 2.4 envelopes, about 6% of pair earnings, to work with a Japanese rather than a foreign partner. Discrimination is also strongly price-sensitive, as in Hedegaard and Tyran (2018). The contact treatment reduces estimated WTP from 2.39 to 1.82, a 24% reduction, but the difference is statistically insignificant: the experiment validates the measurement paradigm while remaining underpowered for plausible effects of a single, brief contact intervention. In exploratory analyses we find that both men and women discriminate against women, at a price exceeding that of anti-foreign discrimination.