Discrimination via Exclusion: An Experiment on Group Identity and Club Goods
Paper number: 13/02
Paper date: March 2013
Paper Category: Discussion Paper
Surajeet Chakravarty and Miguel A. Fonseca
We study using laboratory experiments the impact on cooperation of allowing individuals to invest in group-specific, excludable public goods. We find that allowing different social groups to voluntarily contribute to such goods increases total contributions. However, a significant proportion of that contribution goes towards the group-specific club good, rather than the public good, even when the latter has higher financial returns to cooperation. We find significant evidence of in-group biases, which are manifested by positive in-group reciprocity. That is, club goods allow subjects to display their preferences for interaction with their in-group members, as well as in positive in-group reciprocity.
JEL classification numbers: C92, D02, D03, H41