Spontaneous Discrimination

Marcin P?ski and Bal?zs Szentes

American Economic Review, 2013, vol. 103, issue 6, 2412-36

Abstract: We consider a dynamic economy in which agents are repeatedly matched and decide whether or not to form profitable partnerships. Each agent has a physical color and a social color. An agent's social color acts as a signal, conveying information about the physical color of agents in his partnership history. Before an agent makes a decision, he observes his match's physical and social colors. Neither the physical color nor the social color is payoff relevant. We identify environments where equilibria arise in which agents condition their decisions on the physical and social colors of their potential partners. That is, they discriminate.

JEL-codes: C78 D82 J15 J71 Z13 (search for similar items in EconPapers)
Date: 2013
Note: DOI: 10.1257/aer.103.6.2412
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Citations: View citations in EconPapers (16)

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