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Cross-racial Envy and Underinvestment in South Africa


  • Haile, Daniel
  • Sadrieh, Karim
  • Verbon, Harrie


Trust games are employed to investigate the effect of heterogeneity in income and race on cooperation in South Africa. The amount of socio-economic information available to the subjects about their counterparts is varied. No significant behavioural differences are observed, when no such information is provided. However, when the information is available, it significantly affects individual trust behaviour. The low income subjects from both racial groups invest significantly less in partnerships with the high income subjects of the other racial group than in any other partnership. We attribute this behaviour to cross-racial envy, which on aggregate may lead to substantial underinvestment in the economy.

Suggested Citation

  • Haile, Daniel & Sadrieh, Karim & Verbon, Harrie, 2006. "Cross-racial Envy and Underinvestment in South Africa," 2006 Annual meeting, July 23-26, Long Beach, CA 21269, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea06:21269

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    References listed on IDEAS

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    10. repec:hrv:faseco:30726298 is not listed on IDEAS
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    Cited by:

    1. Christina Fong & Erzo Luttmer, 2007. "What determines giving to hurricane katrina victims? Experimental evidence on income, race, and fairness," Artefactual Field Experiments 00046, The Field Experiments Website.
    2. Michael Naef & Jürgen Schupp, 2009. "Measuring Trust: Experiments and Surveys in Contrast and Combination," SOEPpapers on Multidisciplinary Panel Data Research 167, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Claudia Senik & Holger Stichnoth & Karine Straeten, 2009. "Immigration and Natives’ Attitudes towards the Welfare State: Evidence from the European Social Survey," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 91(3), pages 345-370, May.
    4. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2012. "The dynamic interplay of inequality and trust—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 355-365.
    5. Armin Falk & Christian Zehnder, 2007. "Discrimination and In-group Favoritism in a Citywide Trust Experiment," IEW - Working Papers 318, Institute for Empirical Research in Economics - University of Zurich.
    6. Klaus Abbink & Thomas Jayne & Lars Moller, 2011. "The Relevance of a Rules-based Maize Marketing Policy: An Experimental Case Study of Zambia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(2), pages 207-230.
    7. Christina M. Fong & Erzo F. P. Luttmer, 2009. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Racial Group Loyalty," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 64-87, April.
    8. Fong, Christina M. & Luttmer, Erzo F.P., 2011. "Do fairness and race matter in generosity? Evidence from a nationally representative charity experiment," Journal of Public Economics, Elsevier, vol. 95(5-6), pages 372-394, June.
    9. Catherine C. Eckel & Ragan Petrie, 2011. "Face Value," American Economic Review, American Economic Association, vol. 101(4), pages 1497-1513, June.
    10. repec:dau:papers:123456789/179 is not listed on IDEAS


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