DISCRIMINATION IN TWO-SIDED MATCHING MARKET: EXPERIMENTAL AND THEORETICAL EVIDENCE IN ENTREPRENEURIAL FINANCE *

Abstract

This paper explores statistical discrimination within two-sided matching markets, focusing specifically on the entrepreneurial financing market. Through an experiment involving real US startup founders, we first identify the presence of statistical discrimination against female investors among startup founders. Specifically, female investors' signals are perceived as less informative compared to those of male investors. This discrimination is predominantly driven by male founders and disproportionately affects high-quality female investors, suggesting the existence of gender homophily and a "glass ceiling" for women in this context. Building upon these experimental findings, we develop a novel search-and-matching model with endogenous information aggregation and belief formation. This theoretical framework explains how statistical discrimination can arise endogenously within two-sided matching markets, leading to the observed glass ceiling distributional effect and perpetuating a persistent low female investor participation rate in equilibrium.

Keywords: Discrimination, Two-sided Matching, Experiment, Entrepreneurship JEL Classification: C78, C93, D83, G24, J16, J71, L26

JEL Classification: C78, C93, D83, G40, G24, J15, J16, J71