In‐Group versus Out‐Group Trust: The Impact of Income Inequality

Vivian Lei and Filip Vesely

Southern Economic Journal, 2010, vol. 76, issue 4, 1049-1063

Abstract: In this article, we adopt a variant of the trust game by Berg, Dickhaut, and McCabe (1995) and the dictator game by Cox (2004) to determine if income inequality can activate in‐group favoritism and, if so, whether such a bias is strong enough to survive the removal of income inequality. We find evidence of in‐group favoritism only on the part of rich first movers. Rich first movers trust their in‐group members significantly more in the presence of income inequality not only before but also after they gain enough experience. Poor first movers, in contrast, do not exhibit such in‐group bias. They do not discriminate between in‐group and out‐group at the very outset of the experiment, and once they become experienced, they behave with significantly more trust toward the rich than toward the poor. We also find that in‐group and out‐group favoritism established in the past can be alleviated, but not completely removed, by an equal income distribution.

Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://doi.org/10.4284/sej.2010.76.4.1049

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:soecon:v:76:y:2010:i:4:p:1049-1063

Access Statistics for this article

More articles in Southern Economic Journal from John Wiley & Sons
Bibliographic data for series maintained by Wiley Content Delivery ().