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The Price of Prejudice

  • Morten Hedegaard

    (Department of Economics, Copenhagen University)

  • Jean-Robert Tyran

    (Department of Economics, Copenhagen University)

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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File URL: http://www.econ.ku.dk/english/research/publications/wp/dp_2014/1409.pdf
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Paper provided by University of Copenhagen. Department of Economics in its series Discussion Papers with number 14-05.

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Length: 55 pages
Date of creation: 01 Apr 2014
Date of revision:
Handle: RePEc:kud:kuiedp:1409
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