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Cross-racial envy and underinvestment in South African partnerships

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  • Daniel Haile
  • Abdolkarim Sadrieh
  • Harrie A. A. Verbon

Abstract

Trust games are employed to investigate the effect of heterogeneity in income and race on cooperation in South Africa. The amount of socio-economic information available to the subjects about their counterparts is varied. No significant behavioural differences are observed when no such information is provided. However, when the information is available, it significantly affects individual trust behaviour. The low income subjects from both racial groups invest significantly less in partnerships with the high income subjects of the other racial group than in any other partnership. We attribute this behaviour to cross-racial envy, which on aggregate may lead to substantial efficiency losses. Copyright The Author 2008. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved., Oxford University Press.

Suggested Citation

  • Daniel Haile & Abdolkarim Sadrieh & Harrie A. A. Verbon, 2008. "Cross-racial envy and underinvestment in South African partnerships," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 32(5), pages 703-724, September.
    • Handle: RePEc:oup:cambje:v:32:y:2008:i:5:p:703-724
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    Cited by:

    1. Ravetti, Chiara & Sarr, Mare & Munene, Daniel & Swanson, Tim, 2019. "Discrimination and favouritism among South African workers: Ethnic identity and union membership," World Development, Elsevier, vol. 123(C), pages 1-1.
    2. Greiner, Ben & Ockenfels, Axel & Werner, Peter, 2012. "The dynamic interplay of inequality and trust—An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 355-365.
    3. Falk, Armin & Zehnder, Christian, 2013. "A city-wide experiment on trust discrimination," Journal of Public Economics, Elsevier, vol. 100(C), pages 15-27.
    4. Edward L. Glaeser & David I. Laibson & José A. Scheinkman & Christine L. Soutter, 2000. "Measuring Trust," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 811-846.
      • Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
    5. Elena Cettolin & Sigrid Suetens, 2019. "Return on Trust is Lower for Immigrants," The Economic Journal, Royal Economic Society, vol. 129(621), pages 1992-2009.
    6. Stichnoth, Holger & van der Straeten, Karine, 2009. "Ethnic diversity and attitudes towards redistribution: a review of the literature," ZEW Discussion Papers 09-036, ZEW - Leibniz Centre for European Economic Research.
    7. Luke Condra & Mohammad Isaqzadeh & Sera Linardi, 2016. "Imagined vs. Actual "Others": An Experiment on Interethnic Giving Afghanistan," Framed Field Experiments 00546, The Field Experiments Website.
    8. Lustenhouwer, Joep & Makarewicz, Tomasz & Peña, Juan Carlos & Proaño Acosta, Christian, 2021. "Are some people more equal than others? Experimental evidence on group identity and income inequality," BERG Working Paper Series 168, Bamberg University, Bamberg Economic Research Group.
    9. Naef, Michael & Schupp, Jürgen, 2009. "Measuring Trust: Experiments and Surveys in Contrast and Combination," IZA Discussion Papers 4087, Institute of Labor Economics (IZA).
    10. Cochard, François & Flage, Alexandre & Peterle, Emmanuel, 2019. "Intermediation and discrimination in an investment game: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 168(C), pages 196-208.
    11. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Other publications TiSEM a5e6e0cd-5e07-4a24-a15c-a, Tilburg University, School of Economics and Management.
    12. Chisadza, Carolyn & Nicholls, Nicky & Yitbarek, Eleni, 2021. "Group identity in fairness decisions: Discrimination or inequality aversion?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    13. Werner, Katharina, 2016. "Whom do people trust after a violent conflict? Experimental evidence from Maluku, Indonesia," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-73-16, University of Passau, Faculty of Business and Economics.
    14. Achard, Pascal & Suetens, Sigrid, 2023. "The Causal Effect of Ethnic Diversity on Support for Redistribution and the Role of Discrimination," Discussion Paper 2023-013, Tilburg University, Center for Economic Research.
    15. Liza G. Steele & Krystal M. Perkins, 2018. "The Effects of Perceived Neighborhood Diversity on Preferences for Redistribution: A Pilot Study," Societies, MDPI, vol. 8(3), pages 1-24, September.
    16. Tom Lane, 2015. "Discrimination in the laboratory: a meta-analysis," Discussion Papers 2015-03, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    17. van den Akker, Olmo R. & van Assen, Marcel A.L.M. & van Vugt, Mark & Wicherts, Jelte M., 2020. "Sex differences in trust and trustworthiness: A meta-analysis of the trust game and the gift-exchange game," Journal of Economic Psychology, Elsevier, vol. 81(C).

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