Ethnic Discrimination: Lessons from the Israeli Online Market for Used Cars


  • For many valuable comments and suggestions I thank the editor, Jörn-Steffen Pischke, several anonymous referees, Talia Bar, Greg Besharov, Steve Coate, Liran Einav, Christine Jolls, Devin Pope, Enrichetta Ravina, Moses Shayo and participants of presentations at Ben Gurion University, Cornell University, the European Economic Association Meeting 2010, the Hebrew University, the Israel Democracy Institute, the Israeli Economic Association Meeting (2011 and 2012), the NBER Summer Institute (2011 and 2012) and Tel Aviv University. I am especially grateful to Noam Zussman for his advice. Excellent research assistance was provided by Revital Bar, Roy Barak, Shai Davidai, Michal Drori, Ariel Feitelberg, Yifat Ferder, Lee Goren, Maya Haran, Kfir Harari, Sharon Henig, Na'ama Israeli, Li Or Krengel, Yifat Krispil, Noa Litmanovitz, Daniel Madrid, Roie Mordechaie, Ofir Nadav, Adi Nahum, Daniel Nevo, Niva Porziki, Adi Ra'anan, Lilach Rapaport, Adi Regev, Ittai Shacham, Michal Shamir, Gal Shenhav, Noa Shikler, Karin Telio and Rozi Tshuva. Research was supported by a Marie Curie International Reintegration Grant within the 7th European Community Framework Programme and by a grant from The Maurice Falk Institute for Economic Research in Israel. Additional funding was provided by the Minerva Center for Human Rights and the Shaine Center for Research in Social Science, both at the Hebrew University of Jerusalem.


Using a combination of randomised field experiments, follow-up telephone surveys and other data collection efforts, this article studies the extent and the sources of ethnic discrimination in the Israeli online market for used cars. We find robust evidence of discrimination against Arab buyers and sellers which, the analysis suggests, is motivated by ‘statistical’ rather than ‘taste’ considerations. We additionally find that Arab sellers manipulate their ethnic identity in the market by leaving the name field in their advertisements blank.