Uncovering sophisticated discrimination with the help of credence goods markups

Last registered on July 01, 2019
View Trial History

Pre-Trial

Trial Information

General Information

Title
Uncovering sophisticated discrimination with the help of credence goods markups
RCT ID
AEARCTR-0004328
Initial registration date
June 18, 2019

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 01, 2019, 3:59 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Turkey
Region
City of Antalya

Primary Investigator

Name
Daniel Neururer
Affiliation
University of Innsbruck
Contact Primary Investigator

Other Primary Investigator(s)

Additional Trial Information

Status
Completed
Start date
2018-07-10
End date
2018-10-19
Keywords
Other
Additional Keywords
discrimination, credence goods, expert services, natural field experiment
JEL code(s)
C93, D82, J15
Secondary IDs
https://aspredicted.org (#12363)
Abstract
We present the results of a pre-registered natural field experiment designed to uncover a sophisticated form of discrimination against an immigrant minority in a market for credence goods. For this purpose, we introduce two markups: (i) the credence goods markup defined as the difference between the price paid by the same person for an ordinary service and an otherwise equivalent credence goods service; and (ii) the discriminatory markup defined as the difference between the price paid by a member of an immigrant minority group and the price paid by a member of the majority group for the same kind of service. We document the existence of a large credence goods markup of about 40%, on average. Moreover, we find a sizeable discriminatory markup for the credence goods service but no discriminatory markup for the ordinary service. The results of an ex-post survey suggest that this sophisticated form of discrimination is mainly due to the prejudicial behavior of sellers belonging to an established local ethnic minority group towards buyers belonging to a low-status immigrant ethnic minority group.
External Link(s)

Registration Citation

Citation
Neururer, Daniel . 2019. "Uncovering sophisticated discrimination with the help of credence goods markups." AEA RCT Registry. July 01. https://doi.org/10.1257/rct.4328-1.0
Former Citation
Neururer, Daniel . 2019. "Uncovering sophisticated discrimination with the help of credence goods markups." AEA RCT Registry. July 01. https://www.socialscienceregistry.org/trials/4328/history/49064
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We will use a mystery shopper approach, where research assistants enter cell phone repair shops with a non-functioning phone and ask for a repair. The mystery shoppers are either locals (Turkish) or non-local (Syrian), and either know (ordinary) or do not know (credence) the problem with the phone. The participants (i.e. the cell phone repair shops) are thus assigned to four treatments:

• ordinary_local: ordinary service market and local customer
• credence_local: credence goods market and local customer
• ordinary_non-local: ordinary service market and non-local (Syrian) customer
• credence non-local: credence goods market and non-local (Syrian) customer
Intervention Start Date
2018-07-10
Intervention End Date
2018-10-19

Primary Outcomes

Primary Outcomes (end points)
The main dependent variable is the average repair price in each treatment group.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We plan to conduct a natural field experiment in the Turkish market for cell phone repairs to address the following research questions: (i) To what extend are non-locals discriminated against in an ordinary service market? (ii) To what extend are non-locals discriminated against in a credence goods market? (iii) How large is the ‘credence markup’ (that is, the price difference between a service without credence goods character and the same service with credence goods character) in general? (iv) Is there a difference in the credence markup for non-locals and local customers?

• By comparing the average repair price in the treatment ordinary_local to the average repair price in the treatment ordinary_non-local we address research question (i).
• By comparing the average repair price in the treatment credence_local to the average repair price in the treatment credence_non-local we address research question (ii).
• By comparing the average repair price in the treatment ordinary_local to the average repair price in the treatment credence_local we address research question (iii).
• By comparing the difference of average repair prices between ordinary_local and credence_local to the difference of average repair prices between ordinary_non-local and credence_non-local we address research question (iv).

In addition to the data on repair prices we also plan to collect data on characteristics and attitudes of repair shops via a questionnaire to be filled out by our mystery shoppers and a survey to be completed by the shop owners.
Experimental Design Details
We plan to conduct a natural field experiment in the Turkish market for cell phone repairs to address the following research questions: (i) To what extend are non-locals discriminated against in an ordinary service market? (ii) To what extend are non-locals discriminated against in a credence goods market? (iii) How large is the ‘credence markup’ (that is, the price difference between a service without credence goods character and the same service with credence goods character) in general? (iv) Is there a difference in the credence markup for non-locals and local customers?

• By comparing the average repair price in the treatment ordinary_local to the average repair price in the treatment ordinary_non-local we address research question (i).
• By comparing the average repair price in the treatment credence_local to the average repair price in the treatment credence_non-local we address research question (ii).
• By comparing the average repair price in the treatment ordinary_local to the average repair price in the treatment credence_local we address research question (iii).
• By comparing the difference of average repair prices between ordinary_local and credence_local to the difference of average repair prices between ordinary_non-local and credence_non-local we address research question (iv).

In addition to the data on repair prices we also plan to collect data on characteristics and attitudes of repair shops via a questionnaire to be filled out by our mystery shoppers and a survey to be completed by the shop owners.
Randomization Method
The randomization was done by the field coordinator with the help of a computer.
Randomization Unit
We used a random number generator to match the individual shops to our four treatments (described above) and finally to the undercover shoppers.
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
In total, we plan to collect 200 observations. We will strive to select the sample in such a way that the person behind the counter is Turkish (native). However, we will make sure to document this and control for it if it happens that several shop owners are non-native.
Sample size: planned number of observations
In total, we plan to collect 200 observations. We will strive to select the sample in such a way that the person behind the counter is Turkish (native). However, we will make sure to document this and control for it if it happens that several shop owners are non-native.
Sample size (or number of clusters) by treatment arms
We plan to collect 50 observations per treatment.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Board for Ethical Questions in Science of the University of Innsbruck
IRB Approval Date
2018-04-17
IRB Approval Number
17/2018
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

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Intervention

Is the intervention completed?
Yes
Intervention Completion Date
October 19, 2018, 12:00 +00:00
Data Collection Complete
Yes
Data Collection Completion Date
October 19, 2018, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
157 repair shops. We decided to stop the interaction of the mystery shopper and the repair shop in case the mystery shopper realized that the shop staff is not a Turkish citizen. This seemed necessary because otherwise the distinction between immigrant and native in the expert-customer relationship could be blurred or even reversed. The resulting cancellations led to a slight deviation from our preregistration plan with respect to the number of observations.
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
157 repair shops. We decided to stop the interaction of the mystery shopper and the repair shop in case the mystery shopper realized that the shop staff is not a Turkish citizen. This seemed necessary because otherwise the distinction between immigrant and native in the expert-customer relationship could be blurred or even reversed. The resulting cancellations led to a slight deviation from our preregistration plan with respect to the number of observations.
Final Sample Size (or Number of Clusters) by Treatment Arms
38 ordinary-local, 39 credence-local, 39 ordinary non-local, 41 credence non-local
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials