In-group versus out-group trust : The impact of income inequality

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

25 Scopus Citations
View graph of relations

Author(s)

  • Vivian Lei
  • Filip Vesely

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)1049-1063
Journal / PublicationSouthern Economic Journal
Volume76
Issue number4
Online published1 Apr 2010
Publication statusPublished - Apr 2010

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.

Citation Format(s)

In-group versus out-group trust : The impact of income inequality. / Lei, Vivian; Vesely, Filip.

In: Southern Economic Journal, Vol. 76, No. 4, 04.2010, p. 1049-1063.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review