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A theory of perceived discrimination

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  • Tilman Klumpp
  • Xuejuan Su

Abstract

We develop a model in which individuals compete for a fixed pool of prizes by investing effort in a contest. Individuals belong to two separate and identifiable groups. We say that the contest is discriminatory if a lower share of prizes is reserved for one group than for the other. We show that it can be difficult for an observer to detect the presence or absence of discrimination in the contest, as both regimes can be observationally equivalent. In particular, one group’s belief that it is allocated a lower share of prizes than the other group can be consistent with observed data even if no such group quotas actually exist. Conversely, the belief that the contest does not discriminate can be consistent with data when, in fact, discrimination exists. Incorrect beliefs will therefore not be revised, as the contest generates no evidence to the contrary. Copyright Springer-Verlag 2013

Suggested Citation

  • Tilman Klumpp & Xuejuan Su, 2013. "A theory of perceived discrimination," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 153-180, May.
    • Handle: RePEc:spr:joecth:v:53:y:2013:i:1:p:153-180
    DOI: 10.1007/s00199-011-0684-9
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    Cited by:

    1. Andrew Eckert & Tilman Klumpp & Xuejuan Su, 2017. "An Equilibrium Selection Theory of Monopolization," Southern Economic Journal, John Wiley & Sons, vol. 83(4), pages 1012-1037, April.

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    More about this item

    Keywords

    Contests; Discrimination; Observational equivalence; Agreeing to disagree; J71; J78;
    All these keywords.

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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