How Racial Bias Affects the Perception of Fairness in Economic Decisions

10.coverIn an experiment conducted by psychologists at New York University, Harvard University, and Peking University people or different racial and ethnic backgrounds were paired off against another individual in an ultimatum game. One of the individuals made a proposal to the other on how to split $10 between them. If the proposer’s offer was accepted by the other individual each would keep the amount of money that had been proposed for each participant. If the person given the proposal rejected the offer, neither got any money.

So, for example, if the proposer offer the other individual $3 of the $10 dollars, he or she might view the offer as unfair, however by accepting the proposal the individual would still get $3. By rejecting the proposal no one would receive any money.

The results of the study found that participants were more likely to accept offers from White proposers than Black proposers. On average, Black proposers had to offer larger amounts in order for participants to accept their offer.

The authors speculated that existing racial prejudices and stereotypes led participants to regard low financial offers from Black proposers as unfair and were thus more willing to “punish” the Black proposer by leaving them with no money.

The article, “The Price of Racial Bias: Intergroup Negotiations in the Ultimatum Game,” was published in the journal Psychological Science. It may be accessed here.

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