Face Value

16 Pages Posted: 13 Jul 2011 Last revised: 21 Jul 2011

See all articles by Catherine C. Eckel

Catherine C. Eckel

Texas A&M University

Ragan Petrie

Texas A&M University - Department of Economics; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Date Written: June 2011

Abstract

There is growing evidence of systematic heterogeneity in behavior by observable characteristics, such as what one would see in a face. We ask, is there informational value in knowing these characteristics in a strategic interaction? Subjects are given the opportunity to purchase a photograph of their partner in the play of a trust game. Not everyone purchases the photo, even at prices as low as $0.20. Senders (first movers in the game) have a more inelastic demand for pictures than responders (second movers). White senders have a substantially higher demand than nonwhite senders or responders. For responders, there is no difference in demand for pictures across ethnicity or sex. White senders who pay to see the picture of their partner use the information to discriminate, sending significantly less to black responders than to white responders. Overall, responders return a higher percentage of the amount received as offers go up, but they do differentiate that percentage when they see the picture of the sender, returning more to a member of the same ethnicity. A face, it appears, has strategic value, especially for those who will use the information to differentiate their decisions.

Suggested Citation

Eckel, Catherine C. and Petrie, Ragan, Face Value (June 2011). American Economic Review, Vol. 101, 2011, Available at SSRN: https://ssrn.com/abstract=1843333

Catherine C. Eckel (Contact Author)

Texas A&M University ( email )

5201 University Blvd.
College Station, TX 77843-4228
United States

Ragan Petrie

Texas A&M University - Department of Economics ( email )

4228 TAMU
College Station, TX 77843-4228
United States

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

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