Discrimination with inaccurate beliefs and confirmation bias

Seminario de Investigación del IIEP

Discrimination with inaccurate beliefs and confirmation bias

Expone

Christian Ruzzier | UdeSA

Doctor en Economía (Toulouse School of Economics), Master en Economía Matemática y Econometría (Toulouse School of Economics), Master en Economía (Universidad Torcuato Di Tella), Licenciado en Economía (Universidad Argentina de la Empresa). Profesor Asociado, y Director de la Maestría y del Doctorado en Economía, en la Universidad de San Andrés.

Abstract

We examine patterns of discrimination when employers hold incorrect beliefs about the relationship between group membership and productivity, and suffer from confirmation bias when updating their beliefs. As a result, employers do not correct them fully, leading to persistent wage discrimination. Negative stereotypes generate discrimination against minority workers upon entry to the labor market, but are not enough to have discrimination in the long run, and reversals in discrimination are possible. We also discuss whether interventions aimed at reducing discrimination would succeed if confirmation bias is an important source of discrimination, and consider segregation in an extension with heterogeneous employers.