Cross-Community Audit Methodology for Bias Detection

In Simple Words

To test if store owners treat people differently based on heritage, researchers send out actor buyers from different ethnic backgrounds who follow the exact same script and purchase the exact same items. By comparing what happens to each buyer at the exact same stores, researchers can catch discrimination red-handed.

Research question

Observational transaction data cannot isolate whether price differences stem from true credit risk differences, bargaining skill, or pure identity discrimination. Unbiased detection of ethnic market distortion requires controlled audit experiments that systematically rotate buyer identities across sellers.

Participants

107 pen and stationery shops in Chennai, India, visited by local entrepreneur auditors representing Tamil, Marwari, and Andhra groups.

Study Design

Randomized audit matching where each shop was visited at least once by auditors from each of the three communities using standardized negotiation scripts.

Results

Standardized multi-community audit visits successfully isolated seller pricing differences (-12% for Marwari sellers vs. +5% for Andhra sellers) and buyer-seller match effects independently of product quality or negotiation script variations.

Takeaway

Deploy matched-pair audit buyer teams adhering to identical negotiation protocols to measure discrimination across supply chain vendors.

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