Group Identity, Intergroup Bias, and Discrimination

This paper studies how group a±liation and intergroup bias may affect economic decision- making. Two types of experimental groupings are created and subjects are then paired with either an in-group member or an out-group member in a number of two-person games. The result of this experiment shows that out-group members face a risk of being discriminated against. The cause of the discrimination is not hostility toward out-group members; discrimination is triggered because of higher expectations or favoritism of in-group members. This type of behavior holds regardless of the grouping procedure.