DP3175 Discrimination and Nepotism: The Efficiency of the Anonymity Rule

Author(s): Chaim Fershtman, Uri Gneezy, Frank Verboven
Publication Date: January 2002
Keyword(s): anonymity, discrimination, efficiency, nepotism
JEL(s):
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=3175

The Paper considers two categories of discrimination: ‘discrimination against’ and ‘discrimination in favour’, which Becker coins ‘nepotism’. The Paper develops an experimental test to distinguish between these two types of discrimination. The experiment compares the behaviour towards individuals of different groups with the behaviour towards anonymous individuals (those having no clear group affiliation). We illustrate the two attitudes by considering two segmented societies: Belgian society, with its linguistic segmentation between the Flemish and the Walloons, and Israeli society, where we focus on religious versus secular segmentation. In Belgium, we find evidence of discrimination against. Both the Walloons and the Flemish treat people of their own group in the same way as anonymous individuals while discriminating against individuals of the other group. In contrast, the behaviour of ultra orthodox religious Jews in Israel can be categorized as nepotism: they favour members of their own group while treating anonymous individuals in the same way as secular individuals. The distinction between the different types of discrimination is important in evaluating the effectiveness and the efficiency consequences of anti-discriminatory legislations.