Discrimination And In-group Favoritism In A Citywide Trust Experiment

This paper provides field experimental evidence on the prevalence and determinants of discrimination and in-group favoritism in trust decisions. The authors observe choices of about 1,000 inhabitants of the city of Zurich who take part in a sequential trust game, in which first movers can condition their investments on the residential districts of second movers. The main results can be summarized as follows: First movers discriminate significantly in their investment choices, i.e., strangers receive different investments depending on the district they live in. The systematics of the discrimination pattern is underlined by data from an additional newspaper study, where participants correctly guessed the outcome of the paper.