Reversing Induced Discrimination: Mechanism Design and Experiment

39 Pages Posted: 10 Jul 2014

See all articles by Anne Marie Knott

Anne Marie Knott

Washington University in St. Louis - John M. Olin Business School

Date Written: July 9, 2012

Abstract

Research has shown that the higher penalties for discrimination under the Civil Rights Act of 1991 appear to have induced hiring discrimination. This occurs because employers use the proxy of protected group membership to identify high litigation risk employees in the absence of reliable indicators of true risk. This paper develops and tests a mechanism to reverse the induced discrimination. The mechanism creates a reliable signal of litigation risk to replace the imperfect proxy of protected group membership. This allows employers to reduce litigation risk without discriminating against protected groups. Experimental results indicate that the mechanism behaves as theory predicts. Accordingly, use of the mechanism could restore race/gender-blind hiring.

Keywords: discrimination, CRA91, litigiousness, mechanism, experiment

JEL Classification: C9, D8, J7

Suggested Citation

Knott, Anne Marie, Reversing Induced Discrimination: Mechanism Design and Experiment (July 9, 2012). Available at SSRN: https://ssrn.com/abstract=2463763 or http://dx.doi.org/10.2139/ssrn.2463763

Anne Marie Knott (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1156
St. Louis, MO 63130-4899
United States

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