The Effects of Scarcity on Cheating and In-Group Favoritism

We study the impact of scarcity on cheating and in-group favoritism using a two-stage lab-in-the-field experiment with low-income coffee farmers in a small, isolated village in Guatemala. During the coffee harvesting months, farmers in this village experience a significant income boost from selling their coffee beans. However, during the non-harvesting months, they experience a substantial decline in income, inducing a pronounced state of scarcity, while other factors remain similar. Using this distinctive variance in income, we first conducted our experiment before the coffee harvest (Scarcity period). We then repeated the experiment-with the same group of subjects-during the harvest season (Abundance period). First, using the Fischbacher and Follmi-Heusi (2013) die-roll paradigm, we find that subjects cheat at high levels in both periods when they are the beneficiaries of the cheating. Scarcity does not impact this cheating behavior. Secondly, using subjects' natural village identity, we find significant in-group favoritism for cheating in the Abundance period, which disappears during the Scarcity period. Finally, using a dictator game, we show that this finding holds when the cost of favoring an in-group member is monetary rather than moral.