The Visible Hand: Race and Online Market Outcomes

We examine the effect of race on market outcomes by selling iPods through local online classified advertisements throughout the United States in a year-long field experiment. Each ad features a photograph of the product being held by a dark- or light-skinned (“black ” or “white”) hand. To provide context, we also consider a group of sellers against whom buyers might statistically discriminate for similar reasons: white sellers with wrist tattoos. Black sellers do worse than white sellers on a variety of market outcome measures: They receive 13 % fewer responses and 17 % fewer offers. These effects are strongest in the Northeast, and are similar in magnitude to those associated with the display of a wrist tattoo. Conditional on receiving at least one offer, black sellers also receive 2–4 % lower offers, despite the self-selected—and presumably less biased—pool of buyers. In addition, buyers corresponding with black sellers exhibit 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. We find evidence that black sellers suffer particularly poor outcomes in thin markets; it appears that discrimination may not “survive ” in the