The Visible Hand: Race and Online Market Outcomes

Authors


  • We are grateful to B. Douglas Bernheim, Nicholas Bloom, Caroline Hoxby, Jörn-Steffen Pischke and several referees for useful advice and guidance, and have also benefited from conversations with participants in several Stanford seminars, the San Francisco Federal Reserve Bank's Applied Micro Summer Conference and the University of Chicago Experimental Economics Lunch. Brandon Wall made important contributions to our experimental design and piloting. We appreciate the generous support of the George P. Shultz Dissertation Support Fund.

Abstract

We examine the effect of race on market outcomes by selling iPods through local online classified advertisements throughout the US. Each advertisement features a photograph including a dark or light-skinned hand, or one with a wrist tattoo. Black sellers receive fewer and lower offers than white sellers, and the correspondence with black sellers indicates lower levels of trust. Black sellers' outcomes are particularly poor in thin markets (suggesting that discrimination may not ‘survive’ competition among buyers) and those with the most racial isolation and property crime (consistent with channels through which statistical discrimination might operate).

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