Discrimination is a pervasive aspect of modern society and human relations. Statistical discrimination theory suggests that profit-maximizing employers should use all the information about job candidates, including information about group membership (e.g., race or gender), to make accurate...

Predictive AI is increasingly used to guide decisions on agents. I show that even a bias-neutral predictive AI can potentially amplify exogenous (human) bias in settings where the predictive AI represents a cost-adjusted precision gain to unbiased predictions, and the final judgments are made by...

This paper examines how culture affects information asymmetry in financial markets. We extract firms traded in the U.S. but headquartered in regions sharing Chinese culture (“Chinese firms”), and manually identify a group of U.S. analysts of Chinese ethnic origin (“Chinese analysts”). We...

Does the onset of violent turmoil in an immigrant’s country of origin affect their honesty in economic exchange? We test this question using Egyptian cab drivers in NYC. Native country turmoil could increase demand for remittances or spur anger or anxiety, which could boost cheating, as both...

This paper studies how algorithms use variables to maximize predictive power at the cost of group equity. Group inequity arises if variables enlarge disparities in risk scores across groups. I develop a framework to examine a recidivism risk assessment tool using risk score and novel pretrial...

When race is not directly observed, regulators and analysts commonly predict it using algorithms based on last name and address. In small business lending--where regulators assess fair lending law compliance using the Bayesian Improved Surname Geocoding (BISG) algorithm--we document large...

Proxies for race are commonly used in settings where race cannot be observed directly. In the context of small business lending, we examine the standard race prediction algorithm (BISG), which regulators use to assess compliance with fair lending laws. The algorithm relies on an individual’s...