Uncovering sophisticated discrimination with the help of credence goods markups - evidence from a natural field experiment

Jonathan Hall (), Rudolf Kerschbamer, Daniel Neururer () and Eric Skoog ()

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: We present the results of a pre-registered natural field experiment designed to uncover a sophisticated form of discrimination against an immigrant minority in a market for credence goods. For this purpose, we introduce two markups: (i) the credence goods markup defined as the difference between the price paid by the same person for an ordinary service and an otherwise equivalent credence goods service; and (ii) the discriminatory markup defined as the difference between the price paid by a member of an immigrant minority group and the price paid by a member of the majority group for the same kind of service. We document the existence of a large credence goods markup of about 40%, on average. Moreover, we find a sizeable discriminatory markup for the credence goods service but no discriminatory markup for the ordinary service. The results of an ex-post survey suggest that this sophisticated form of discrimination is mainly due to the prejudicial behavior of sellers belonging to an established local ethnic minority group towards buyers belonging to a low-status immigrant ethnic minority group.

Keywords: patience; time preferences; group decisions; payoff heterogeneity; experiment (search for similar items in EconPapers)
JEL-codes: C93 D82 J15 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019-11
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2019-11

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