Experimental evidence on how implicit racial bias affects risk preferences

We ask how human behavior changes when racial discrimination is costly and when choices are risky. By asking N = 4,944 participants in Germany to form a soccer team in a series of online experiments, we measure decision-making in an accessible way. Higher costs of discrimination can reduce disparities, but we show that these costs can also trigger implicit racial bias: participants who received an additional financial incentive to select more skilled soccer players outperformed nonincentivized participants and differentiated less based on skin color. However, when confronted with risky choices in a lottery, incentivized participants are more likely to gamble to avoid players with a darker skin color. That is, racial (minority) markers alter the risk preferences of people when their decisions carry costly consequences. This implicit racial bias may partly explain why members of visible minority groups are regularly discriminated against in real-world competitive markets.