Costless Discrimination and Unequal Achievements in a Labour Market Experiment

35 Pages Posted: 17 Dec 2011

See all articles by Antonio Filippin

Antonio Filippin

Università degli Studi di Milano; IZA Institute of Labor Economics

Francesco Guala

Università degli Studi di Milano - Department of Economics, Management and Quantitative Methods

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.

Keywords: discrimination, tournament, groups, experiment

JEL Classification: J71, D44, C9

Suggested Citation

Filippin, Antonio and Guala, Francesco, Costless Discrimination and Unequal Achievements in a Labour Market Experiment. IZA Discussion Paper No. 6187, Available at SSRN: https://ssrn.com/abstract=1973916

Antonio Filippin (Contact Author)

Università degli Studi di Milano ( email )

Milan, 20122
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Francesco Guala

Università degli Studi di Milano - Department of Economics, Management and Quantitative Methods ( email )

via Conservatorio 7
Milano, 20122
Italy

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