Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36274
Authors: 
Vendrik, Maarten C. M.
Schwieren, Christiane
Year of Publication: 
2009
Series/Report no.: 
IZA Discussion Papers 4571
Abstract: 
According to social-psychological research, feelings of uncertainty in decision-making evoke two opposite responses: (i) reduction of uncertainty by information search, leading to less stereotyping of people, and hence less discrimination; (ii) social identification with an ingroup, inducing more reliance on stereotypic perceptions and prejudices, and hence more discrimination against an outgroup. We integrate both responses in a microeconomic model of hiring and pay decisions by an employer. Increasing competition in the product market makes the employer feel more uncertain about his profits, but also raises the opportunity cost of screening expenditures. This elicits substitution of ingroup identification for screening expenditures, and hence enhances discrimination.
Subjects: 
Discrimination
stereotyping
social identity
uncertainty
screening
JEL: 
J7
M51
Document Type: 
Working Paper

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