Does cronyism pay? Costly ingroup favoritism in the lab


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.

Journal article

Banuri,Sheheryar, Eckel, Catherine and Wilson, Rick K.. "Does cronyism pay? Costly ingroup favoritism in the lab." Economic Inquiry, 60, no. 3 (2022) Wiley: 1092-1110.

Has part(s)
Forms part of
This is an author's peer-reviewed final manuscript, as accepted by the publisher. The published article is copyrighted by Wiley.
Link to license
Citable link to this page