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Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market

David Dickinson, David Masclet () and Emmanuel Peterle ()

Economics Working Paper Archive (University of Rennes 1 & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS

Abstract: We examine both the private benefits and spillover costs of labor market favoritism in a unique laboratory experiment design. Group identities are first created and the data show that both employment preference rankings and wage offers favor in-group members. Workers positively reciprocate towards in-group employers by choosing higher effort in a gift exchange game. Thus, favoritism can be privately rational for employers. However, unemployed subjects are allowed to burn resources (at a cost to themselves), and we document significantly increased resource destruction when unemployment can be attributed to favoritism towards others. This highlights a significant spillover cost of favoritism that is often ignored, and it points to one possible micro-foundation of some anti-social behavior.

Keywords: Discrimination; Experimental Economics; Social identity; Conflicts (search for similar items in EconPapers)
JEL-codes: C90 C92 J15 J16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-lab
Date: 2018-01
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Related works:
Journal Article: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2018) Downloads
Working Paper: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2018) Downloads
Working Paper: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2018) Downloads
Working Paper: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2017) Downloads
Working Paper: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2017) Downloads
Working Paper: Discrimination as favoritism: The private benefits and social costs of in-group favoritism in an experimental labor market (2017) Downloads
Working Paper: Discrimination as Favoritism: The Private Benefits and Social Costs of In-group Favoritism in an Experimental Labor Market (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:2018-01

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