Cooperative Minorities and Intergroup Hostility

In this paper, we consider a situation in which the benefits obtained through membership in a minority have the unfortunate side effect of indirectly imposing costs on those same minority members. The central idea links to the issues of envy and hostility, with the latter treated as the behavioral implication of the former. We show the circumstances in which cooperation arises as an equilibrium strategy in intragroup trades for the minority while transactions within the majority and between members of different groups remain non-cooperative. We then discuss how such an outcome may generate a "hostility externality" so that partial cooperation -- ie, cooperation within a subset of the population, may in fine prove detrimental for the cooperative group. We conclude with insights on how the hostility externality can be internalized.