Sanctioning and Trustworthiness Across Ethnic Groups

Ian Levely and Vojtěch Bartoš

No 107, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We show how sanctioning is more effective in increasing cooperation between groups than within groups. We study this using a trust game among ethnically diverse subjects in Afghanistan. In the experiment, we manipulate i) sanctioning and ii) ethnic identity. We find that sanctioning increases trustworthiness in cross-ethnic interactions, but not when applied by a co-ethnic. While we find higher in-group trustworthiness in the absence of sanctioning, the availability and use of the sanction closes this gap. This has important implications for understanding the effect of institutions in developing societies where ethnic identity is salient. Our results suggest that formal institutions for enforcing cooperation are more effective when applied between, rather than within, ethnic groups, due to behavioral differences in how individuals respond to sanctions.

Keywords: sanctions; cooperation; crowding out; moral incentives; ethnicity; afghanistan (search for similar items in EconPapers)
JEL-codes: C93 D01 D02 J41 (search for similar items in EconPapers)
Date: 2018-07-24
New Economics Papers: this item is included in nep-evo, nep-exp and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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