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Statistical discrimination without knowing statistics: blame social interactions?

Author

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  • Emily Tanimura

    (University Paris 1 Panthéon-Sorbonne: Universite Paris 1 Pantheon-Sorbonne)

Abstract

We consider a model where decision makers repeatedly receive candidates and assign to them a binary decision that we can interpret as hire/not hire. The decision makers base their decision on the characteristics of the candidate but they are also sensitive to the social influence exerted by the observed hiring decisions of other employers. We characterize the long run frequency of decisions in the model, and show in particular that for candidates belonging to a group with “unfavorable” characteristics, the dynamics increase the rejection rate compared to a scenario with independent decisions, suggesting that social influence between decision makers can generate effects very similar to those that result from statistical discrimination. We then analyze how the existence and magnitude of a reinforcement in rejection rates depends on different properties of the distribution of characteristics in the candidate population.

Suggested Citation

  • Emily Tanimura, 2025. "Statistical discrimination without knowing statistics: blame social interactions?," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 20(2), pages 547-574, April.
    • Handle: RePEc:spr:jeicoo:v:20:y:2025:i:2:d:10.1007_s11403-024-00430-2
    DOI: 10.1007/s11403-024-00430-2
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    More about this item

    Keywords

    Statistical discrimination; Social influence; Binary choice; Curie–Weiss model; Decision dynamics; Invariant measures; Reinforcement effects;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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