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Costless discrimination and unequal achievements in a labour market experiment

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  • Antonio FILIPPIN

    ()

  • Francesco GUALA

    ()

Abstract

We investigate the emergence of discrimination in an experiment where individuals affiliated to different groups compete for a monetary prize, submitting independent bids to an auctioneer. The auctioneer receives perfect information about the bids (i. e. there is no statistical discrimination), and she has no monetary incentive to favour the members of her own group (the bidders are symmetric). We observe nonetheless some discrimination by auctioneers, who tend to assign the prize more frequently to a member of their own group when two or more players put forward the highest bid. Out-group bidders react to this bias and reduce significantly their bids, causing an average decay of their earnings throughout the game, with cumulative effects that generate strongly unequal outcomes. Because the initial bias is costless, such mechanism can survive even in competitive market, providing a rationale for a well-known puzzle in the literature, i. e. the long-run persistence of discrimination.

Suggested Citation

  • Antonio FILIPPIN & Francesco GUALA, 2011. "Costless discrimination and unequal achievements in a labour market experiment," Departmental Working Papers 2011-30, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2011-30
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    File URL: http://wp.demm.unimi.it/files/wp/2011/DEMM-2011_030wp.pdf
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    References listed on IDEAS

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    1. Andrew Schotter & Keith Weigelt, 1992. "Asymmetric Tournaments, Equal Opportunity Laws, and Affirmative Action: Some Experimental Results," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 511-539.
    2. Filippin, Antonio, 2003. "Discrimination and Workers' Expectations," Royal Economic Society Annual Conference 2003 78, Royal Economic Society.
    3. Hanming Fang & Andrea Moro, 2010. "Theories of Statistical Discrimination and Affirmative Action: A Survey," NBER Working Papers 15860, National Bureau of Economic Research, Inc.
    4. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1985. "Tournaments and Piece Rates: An Experimental Study," Working Papers 85-21, C.V. Starr Center for Applied Economics, New York University.
    5. Davis, Douglas D., 1987. "Maximal quality selection and discrimination in employment," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 97-112, March.
    6. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical Theories of Discrimination in Labor Markets," ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
    7. Bull, Clive & Schotter, Andrew & Weigelt, Keith, 1987. "Tournaments and Piece Rates: An Experimental Study," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 1-33, February.
    8. Filippin, Antonio, 2009. "Can Workers' Expectations Account for the Persistence of Discrimination?," IZA Discussion Papers 4490, Institute for the Study of Labor (IZA).
    9. Roland G. Fryer & Jacob K. Goeree & Charles A. Holt, 2005. "Experience-Based Discrimination: Classroom Games," The Journal of Economic Education, Taylor & Francis Journals, pages 160-170.
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    Cited by:

    1. Merlino, Luca Paolo, 2012. "Discrimination, technology and unemployment," Labour Economics, Elsevier, pages 557-567.

    More about this item

    Keywords

    Discrimination; tournament; groups; experiment;

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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