DISCRIMINATION IN TWO-SIDED MATCHING MARKET: EXPERIMENTAL AND THEORETICAL EVIDENCE IN ENTREPRENEURIAL FINANCE *
73 Pages Posted: 4 Apr 2022 Last revised: 30 Apr 2024
Junlong Feng
Hong Kong University of Science & Technology (HKUST)
Ye Zhang
Stockholm School of Economics - Finance Department
Weijie Zhong
Columbia University, Graduate School of Arts and Sciences, Department of Economics
Ofir Gefen
National University of Singapore (NUS) - NUS Business School
Date Written: March 23, 2022
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
Suggested Citation: Suggested Citation
Junlong Feng
Hong Kong University of Science & Technology (HKUST)
Ye Zhang (Contact Author)
Stockholm School of Economics - Finance Department ( email )
Stockholm
Sweden
HOME PAGE: http://https://www.yezhang.space/
Weijie Zhong
Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )
420 W. 118th Street
New York, NY 10027
United States
HOME PAGE: http://www.columbia.edu/~wz2269
Ofir Gefen
National University of Singapore (NUS) - NUS Business School ( email )
15 Kent Ridge Dr
Singapore, 129800
Singapore
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