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An Experimental Study of Statistical Discrimination by Employers

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  • Nick Feltovich
  • Chris Papageorgiou

Abstract

This article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types. The question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group. If prior opinions are weak, the employer will use Information from the workplace to quickly update any incorrect group‐based stereotypes it may have. On the other hand, if priors are heavily weighted, incorrect initial perceptions will result in persistent wage differences. Our experimental findings are twofold. First, subjects' (employers') behavior moves quickly toward optimal choices. Second, strong priors are hard to establish. These results suggest that it would take a long time for employers to form group‐based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes.

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  • Nick Feltovich & Chris Papageorgiou, 2004. "An Experimental Study of Statistical Discrimination by Employers," Southern Economic Journal, John Wiley & Sons, vol. 70(4), pages 837-849, April.
    • Handle: RePEc:wly:soecon:v:70:y:2004:i:4:p:837-849
    DOI: 10.1002/j.2325-8012.2004.tb00607.x
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    2. Rödin, Magnus & Özcan, Gülay, 2011. "Is It How You Look or Speak That Matters? - An Experimental Study Exploring the Mechanisms of Ethnic Discrimination," SULCIS Working Papers 2011:3, Stockholm University, Linnaeus Center for Integration Studies - SULCIS.
    3. Michael P. Kidd & Paul S. Carlin & Jonathan Pot, 2008. "Experimenting with Affirmative Action: The Coate and Loury Model," The Economic Record, The Economic Society of Australia, vol. 84(266), pages 322-337, September.

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