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When to Favour Your Own group? The Threats of Costly Punishments and In-group Favouritism

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  • Donna Harris
  • Benedikt Herrmann
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    Abstract

    Using a laboratory experiment with minimal groups, we examined the extent to which the threats of costly punishments affect in-group favouritism behaviour. We studied three types of punishment separately: in-group, out-group, and third-party punishments. In line with previous studies, the majority of the allocators favoured their own group by allocating more money to each of the in-group members at the expense of the out-group in the baseline without punishment. In the in-group punishment treatment, we observed a slight increase in in-group favouritism behaviour. On the contrary, when only the out-group could punish the allocators, there was a significant drop in in-group favouritism behaviour as well as an increase in the equal division option. Finally, when faced with an independent third-party punisher the allocators continued to favour their own group. The threat of third-party punishment appeared to have no effect on their decisions. Our paper contributes to the literature on in-group favouritism and the nature of social norms by showing that the decision whether to favour one’s own group is affected by the threats of in-group and out-group punishments and whether it leads to an increase or decrease in this behaviour depends on who has the punishment power. Parochial or in-group biased norm was enforced by the in-group members, whilst ‘egalitarian sharing norm’ (across groups) was enforced by the out-group members. We conclude firstly that people apply different ‘self-serving’ social norms depending on their own group identity. Secondly, unlike selfish or opportunistic behaviours, independent third-parties, who only observed this behaviour but were not directly affected by it, were not willing to punish this behaviour.�

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    Bibliographic Info

    Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 628.

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    Date of creation: 02 Nov 2012
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    Handle: RePEc:oxf:wpaper:628

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    Keywords: In-group favouritism; Group behaviour; Social identity; Social norm; In-group punishment; Out-group punishment; Third-party punishment; Favour game;

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    1. Fehr, Ernst & Schmidt, Klaus M., 1999. "A theory of fairness, competition, and cooperation," Munich Reprints in Economics, University of Munich, Department of Economics 20650, University of Munich, Department of Economics.
    2. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
    3. List, John A. & Rasul, Imran, 2011. "Field Experiments in Labor Economics," Handbook of Labor Economics, Elsevier, Elsevier.
    4. Jordi Brandts & Gary Charness, 2011. "The strategy versus the direct-response method: a first survey of experimental comparisons," Experimental Economics, Springer, Springer, vol. 14(3), pages 375-398, September.
    5. Jeffrey Carpenter & Peter Matthews, 2009. "What norms trigger punishment?," Experimental Economics, Springer, Springer, vol. 12(3), pages 272-288, September.
    6. Ben-Ner, Avner & McCall, Brian P. & Stephane, Massoud & Wang, Hua, 2009. "Identity and in-group/out-group differentiation in work and giving behaviors: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 72(1), pages 153-170, October.
    7. Güth, Werner & Levati, M. Vittoria & Ploner, Matteo, 2008. "Social identity and trust--An experimental investigation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 37(4), pages 1293-1308, August.
    8. Bandiera Oriana & Barankay Iwan & Rasul Imran, 2006. "The Evolution of Cooperative Norms: Evidence from a Natural Field Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, De Gruyter, vol. 5(2), pages 1-28, March.
    9. Zantman, Wilfried, 2002. " Constitutional Design and Regional Favoritism," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 4(1), pages 71-93.
    10. Naegelen, Florence & Mougeot, Michel, 1998. "Discriminatory public procurement policy and cost reduction incentives," Journal of Public Economics, Elsevier, Elsevier, vol. 67(3), pages 349-367, March.
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