The Effect of Group Identity on Hiring Decisions with Incomplete Information

Fortuna Casoria, Ernesto Reuben and Christina Rott ()
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Christina Rott: School of Business and Economics, Vrije Universiteit Amsterdam, 1081 HV Amsterdam, Netherlands; Tinbergen Institute, 1082 MS Amsterdam, Netherlands

Management Science, 2022, vol. 68, issue 8, 6336-6345

Abstract: We investigate the effects of group identity on hiring decisions with adverse selection problems. We run a laboratory experiment in which employers cannot observe a worker’s ability or verify the veracity of the ability the worker claims to have. We evaluate whether sharing an identity results in employers discriminating in favor of ingroup workers and whether it helps workers and employers overcome the adverse selection problem. We induce identities using the minimal group paradigm and study two settings: one in which workers cannot change their identity and one in which they can. Although sharing a common identity does not make the worker’s claims more honest, employers strongly discriminate in favor of ingroup workers when identities are fixed. Discrimination cannot be explained by employers’ beliefs and, hence, seems to be taste-based. When possible, few workers change their identity. However, the mere possibility of changing identities erodes the employers’ trust toward ingroup workers and eliminates discrimination.

Keywords: discrimination; hiring; group identity; adverse selection (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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http://dx.doi.org/10.1287/mnsc.2022.4462 (application/pdf)

Related works:
Working Paper: The effect of group identity on hiring decisions with incomplete information (2020)
Working Paper: The effect of group identity on hiring decisions with incomplete information (2020)
Working Paper: The Effect of Group Identity on Hiring Decisions with Incomplete Information (2020)
Working Paper: The Effect of Group Identity on Hiring Decisions with Incomplete Information (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:8:p:6336-6345

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