Title: Games of Prejudice – Experiments at the Extensive and Intensive Margin

Abstract: We design a framed experiment to investigate labor market discrimination at the extensive margin (hiring stage) and the intensive margin (job offer stage). Our lab-in-the-field experiment, implemented in Slovakia, exogenously varies employer information and elicits employers’ beliefs to provide causal evidence on the incidence, sources, and costs of discriminatory behavior. Results indicate that discriminatory behavior is significantly higher at the hiring stage than the wage offer stage. Further, the observed discriminatory behavior stems exclusively due to taste-based reasons and not due to mistaken beliefs about worker performance. We find the incidence of taste-based discrimination to persist even when employers incur modest economic costs, and disappear only with prohibitively high costs, which warrants additional policy planning to diffuse such animus-based discriminatory behavior.