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A characterization of "Phelpsian" statistical discrimination

Chambers, Christopher P. and Echenique, Federico (2018) A characterization of "Phelpsian" statistical discrimination. . (Unpublished)

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We establish that statistical discrimination is possible if and only if it is impossible to uniquely identify the signal structure observed by an employer from a realized empirical distribution of skills. The impossibility of statistical discrimination is shown to be equivalent to the existence of a fair, skill-dependent, remuneration for workers. Finally, we connect the statistical discrimination literature to Bayesian persuasion, establishing that if discrimination is absent, then the optimal signaling problem results in a linear payoff function (as well as a kind of converse).

Item Type:Report or Paper (Discussion Paper)
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Additional Information:Echenique thanks the NSF for support through the grants SES1558757 and CNS-1518941. We are grateful to Leeat Yariv for comments on a previous draft.
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Record Number:CaltechAUTHORS:20190626-161346320
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:96760
Deposited By: Tony Diaz
Deposited On:27 Jun 2019 01:44
Last Modified:27 Jun 2019 01:44

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