In-group and out-group biases in the marketplace: a field experiment during the World Cup

We investigate the effects of group identity on discrimination by conducting an audit study in electronics markets in Brazil during the 2014 Brazil World Cup. Buyers’ group membership was identified by the shirts of the national football teams which were controlled in the experiment. We then exploit the outcomes of the WC matches, which arguably affected the salience of sellers’ group identity, to identify discrimination. Although we find that foreigners are overcharged, we do not detect discrimination against buyers wearing a rival team shirt. In contrast, we do detect in-group market favouritism towards buyers wearing the Brazil shirt when Brazil had won a match in the very recent past. Our analysis rejects the explanation that sellers’ behaviour was motivated entirely by economic profits. Instead, the results are more consistent with Becker’s taste-based discrimination theory and shed light on the ways in which in-group and out-group biases occur in market outcomes.