Jennifer Doleac ’03, author of one of my favorite Williams theses, is doing fascinating work in graduate school.

We posted at least three advertisements in each of approximately 300 markets between March 2009 and March 2010, for a total of 1200 advertisements. Each ad was online for twelve hours (during the day or overnight) during which potential buyers could respond via e-mail. Photos were randomly assigned across several other advertisement characteristics.
We asked each respondent for his or her best offer by e-mail, and ultimately offered to ship the iPod to the highest bidder in exchange for payment by PayPal, an online payments processor. This was a somewhat suspicious proposal in these markets, where participants expect to meet locally, and we interpret buyers’ responses to this offer as an indicator of underlying trust. We then compared how each group of sellers fared on a variety of dimensions. Here is what we found:

* Black sellers received 13% fewer responses and 17% fewer offers than white sellers.
* The average offer received by black sellers is 2%-4% lower, despite the self-selected – and presumably less biased – pool of bidders responding to these ads.
* The effects are similar for tattooed sellers, suggesting a role for statistical discrimination.
* Buyers corresponding with black sellers exhibited lower trust: They are 17% less likely to include their name in e-mails, 44% less likely to accept delivery by mail, and 56% more likely to express concern about making a long-distance payment.

Clearly, black sellers are at a significant disadvantage to whites.

Fascinating stuff. See here for the academic paper and here for the photos used in the experiment.

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