The Price of Prejudice

Morten Hedegaard, Jean-Robert Tyran

We present a new type of field experiment to investigate ethnic prejudice in the
workplace. Our design allows us to study how potential discriminators respond to
changes in the cost of discrimination. We find that ethnic discrimination is
common but remarkably responsive to the “price of prejudice”, i.e. to the
opportunity cost of choosing a less productive worker on ethnic grounds. In
addition, we find that the standard theory of statistical discrimination fails to
explain observed choices, and that taking ethnic prejudice into account helps to
predict the incidence of discrimination.

Department of Economics, Vienna Center for Experimental Economics
External organisation(s)
University of Copenhagen
No. of pages
Publication date
Austrian Fields of Science 2012
502002 Labour economics
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