Endophilia or Exophobia: Beyond Discrimination

Abstract

The discrimination literature treats outcomes as relative. But does a differential arise because agents discriminate against others—exophobia—or because they favor their own kind—endophilia? Using a field experiment that assigned graders randomly to students' exams that did/ did not contain names, on average we find favoritism but no discrimination by nationality, and some evidence of favoritism for the opposite gender. We identify distributions of individuals' preferences for favoritism and discrimination. We show that a changing correlation between them generates perverse changes in market differentials and that their relative importance informs the choice of a base group in adjusting wage differentials.