You are Not in My Boat: Common Fate and Discrimination Against Outgroup Members

Abstract

Sharing a common fate with some people but not others may affect how economic agents behave in economic transactions, quite independently of strategic incentives. We present an experimental test of the effect of perceptions of common fate in bargaining games. No discrimination was found in a coordination game, a Nash demand game and an ultimatum game. In settings where the bargaining power was all with one subject (the dictator game and a 'unilateral power game'), about half of the subjects engaged in negative discrimination: insiders were not treated better relative to control sessions, but outsiders were treated worse.

Keywords: bargaining, dictator game, discrimination

JEL Classification: C72, C78, C91