Does cronyism pay? Costly ingroup favoritism in the lab

Banuri, Sheheryar, Eckel, Catherine and Wilson, Rick K. (2022) Does cronyism pay? Costly ingroup favoritism in the lab. Economic Inquiry, 60 (3). pp. 1092-1110. ISSN 0095-2583

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Cronyism in firms arises when favoritism toward an ingroup affects personnel decisions. Two main motives underlie cronyism: profit, if an ingroup employee works harder; or altruism, if used to transfer resources. In a lab-experiment trust game with naturally-occurring groups, an employer (proposer) faces an employee (responder) who is or is not an ingroup member. We see that both motives play a role. Cronyism is more likely from employers who are more altruistic to the ingroup in a dictator game; and even low-productivity (by design) ingroup members reciprocate trust generously. Cronyism pays for those who engage in it.

Item Type: Article
Additional Information: Research Funding: National Science Foundation. Grant Number: SES-0921884
Uncontrolled Keywords: cronyism,group identity,ingroup,discrimination,trust,reciprocity,lab experiment,trust,group identity,lab experiment,reciprocity,cronyism,discrimination,ingroup,economics and econometrics,business, management and accounting(all) ,/dk/atira/pure/subjectarea/asjc/2000/2002
Faculty \ School: Faculty of Social Sciences > School of Economics
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Depositing User: LivePure Connector
Date Deposited: 08 Feb 2022 10:30
Last Modified: 23 Oct 2022 03:31
DOI: 10.1111/ecin.13080

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