Banuri,SheheryarEckel, CatherineWilson, Rick K.2022-06-082022-06-082022Banuri,Sheheryar, Eckel, Catherine and Wilson, Rick K.. "Does cronyism pay? Costly ingroup favoritism in the lab." <i>Economic Inquiry,</i> 60, no. 3 (2022) Wiley: 1092-1110. https://doi.org/10.1111/ecin.13080.https://hdl.handle.net/1911/112459Cronyism 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.engThis is an author's peer-reviewed final manuscript, as accepted by the publisher. The published article is copyrighted by Wiley.Journal articlehttps://doi.org/10.1111/ecin.13080