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Group Identity and Discrimination in Small Markets: Asymmetry of In-Group Favors

  • Gerhard Riener


    (Graduate College "The Economics of Innovative Change", Friedrich Schiller University, Jena)

  • Alexander Schacht


    (Graduate College "The Economics of Innovative Change", Friedrich Schiller University, Jena)

We experimentally study the inuence of induced group identity on the determination of prices and beliefs in a small market game. We create group identity through a focal point coordination game. Subjects play a three-person bargaining game where one seller can sell an indivisible good to one of two competing buyers under four different treatments varying the buyer-seller constellation. We find evidence of in group favoritism on the buyer side. However we do not detect a lower ask prices for in-group sellers for in-group buyers, indicating that in-group favoritism is in favor of the more powerful market participant.

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Paper provided by Friedrich-Schiller-University Jena in its series Jena Economic Research Papers with number 2011-043.

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Date of creation: 07 Oct 2011
Date of revision:
Handle: RePEc:jrp:jrpwrp:2011-043
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