Experimental Design
This experiment consists of two phases: 1) the preliminary phase, in which we aim to recruit 150 participants to complete a series of anagram tasks; and 2) the main phase, in which we aim to recruit 100 participants for each of the four treatments to complete a hiring task (i.e., 400 participants in total).
In the preliminary phase, participants will be asked to complete five 2-minute anagram tasks individually and paid by piece-rate performance. This phase is designed to generate actual profiles of candidates to be used in the main phase of the experiment. The benefit of using actual profiles is to introduce real consequences for discriminatory behaviour and therefore capture the actual level of employer discrimination (Hedegaard & Tyran, 2018). To construct a balanced candidates pool for the second phase, 75 participants will be recruited from an ethnic minority group (i.e., East Asians) and the remaining 75 will be recruited from the ethnic majority group (i.e., Whites). Out of the five performances, we drop the lowest and the highest scores to form the final candidate profiles. And we randomly choose 2 scores from the rest of 3 scores remaining as the pre-performance score and interview performance score
In the main phase of the experiment, participants will be asked to finish a manager task to make some hiring decisions, given a set of 4 pre-screened candidate profiles drawn from the data collected in the preliminary phase. Each participant in this phase will be assigned to one of the following four experimental treatments: an NC-Flexible treatment with neither the equal pay policy nor the hiring competition (Treatment 1), an NC-fixed treatment without the hiring competition, but with the equal pay policy that forces employers to offer the same wage to all desired candidates (Treatment 2), a C-Flexible treatment without the equal pay policy but with hiring competition in which each employer needs to compete with another employer in terms of wages for each desired candidates (Treatment 3), and a C-Fixed treatment with both equal pay policy and hiring competition. Note that we will only recruit participants from the ethnic majority group as employers/managers". Each set of the four candidates' profiles include 2 minority candidates and 2 majority candidates, which are randomly selected from the pool collected in the preliminary phase.
The employer/manager is given the interview performances of all four candidates and is asked whether they want to hire or not hire for each candidate; and if they hire, what is the wage they are willing to offer. Each candidate will have an unknown reservation wage. Employer/manager can successfully hire the candidate if their wage offer is higher than candidate's reservation wage (Treatment 1 and 2), or if their wage offer is higher than both candidate's reservation wage and the other manager (competitor)'s wage offer to the same candidate (Treatment 3 and 4). The potential employer/manage will be able to select an identical wage offer (Treatment 2 and 4) or different wage offers to different candidates. On top of interview performances, the potential employer/manager will also be given candidates’ age, prolific id (not exactly the same as the real ID), and the ethnicity information (reflected through the surnames).