Ethan O'Leary

(Mis)anticipated Discrimination: Experimental Evidence on Misperceived Beliefs Perpetuating Inequality (Job Market Paper)

I theoretically propose and experimentally test for a novel mechanism through which discrimination persists: the misperception of statistical discrimination as taste-based discrimination. Key points from the theory and experiment results:

1. When discrimination comes from an ambiguous source, individuals overestimate the probability that it comes from a taste-based discriminator: they misattribute the source of discrimination.

2. Misattribution leads to discrimination traps: the more likely one believes the employer is a taste-based discriminator the lower (higher) the average productivity of applicants from the discriminated (favoured) group (see graphs).  This application behaviour rationalises statistical discrimination and hiring outcomes do not challenge the misattribution.

3. Misattribution has indirect effects on discrimination persistence.  The more likely one believes the employer is a taste-based discriminator, the more unfair one perceives the labour market and the lower one's demand for temporary affirmative action -  a policy that would re-coordinate the market out of statistical discrimination.