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The effect of group identity on hiring decisions with incomplete information

Fortuna Casoria (), Ernesto Reuben () and Christina Rott ()
Additional contact information
Christina Rott: Vrije Universiteit Amsterdam, 1081HV Amsterdam, The Netherlands

No 2033, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

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 nor 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 where workers cannot change their identity and one where 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 towards ingroup workers and eliminates discrimination.

Keywords: Labor; Discrimination; Identity; Economics: Game Theory and Bargaining Theory; Hiring (search for similar items in EconPapers)
JEL-codes: C9 D82 J71 M51 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-exp, nep-gth, nep-lma, nep-ore and nep-soc
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Related works:
Working Paper: The effect of group identity on hiring decisions with incomplete information (2020) Downloads
Working Paper: The Effect of Group Identity on Hiring Decisions with Incomplete Information (2020) Downloads
Working Paper: The Effect of Group Identity on Hiring Decisions with Incomplete Information (2020) Downloads
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