49 Pages Posted: 11 Apr 2013
Date Written: November 26, 2012
We present a laboratory experiment to test the strength of two motives for engaging in nepotism: beliefs and favoritism. Using real-world groups, nepotism is introduced by allowing partner selection in the trust game. The design varies: (1) the productivity of group members and (2) the ability to select partners. We find beliefs to be the predominant motive, while favoritism plays a role when group members are equally productive. Partnering with group members is always profitable, except when group members are less productive and partner selection is unavailable. These results help explain why nepotism persists.
Keywords: Nepotism, Lab Experiment, Corruption, Group Identity, Discrimination, Trust, Reciprocity
JEL Classification: C92, D73, M51
Suggested Citation: Suggested Citation