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An Experimental Study of Statistical Discrimination by Employers
Author(s) -
Feltovich Nick,
Papageorgiou Chris
Publication year - 2004
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.1002/j.2325-8012.2004.tb00607.x
Subject(s) - prior probability , wage , statistical discrimination , perception , group (periodic table) , psychology , social psychology , economics , labour economics , computer science , artificial intelligence , bayesian probability , chemistry , neuroscience , organic chemistry
This article reports findings of an experiment motivated by a dynamic labor market model that considers the problem faced by employers in making hiring decisions between workers of different types. The question examined here is how quickly employers learn about the ability of a group of workers through observing representatives of that group. If prior opinions are weak, the employer will use Information from the workplace to quickly update any incorrect group‐based stereotypes it may have. On the other hand, if priors are heavily weighted, incorrect initial perceptions will result in persistent wage differences. Our experimental findings are twofold. First, subjects' (employers') behavior moves quickly toward optimal choices. Second, strong priors are hard to establish. These results suggest that it would take a long time for employers to form group‐based stereotypes and that such stereotypes should go away quickly in response to signals that contradict these stereotypes.