Reciprocity and Prejudice

The dissertation develops and tests a new theory to explain intergroup cooperation and outgroup discrimination. The theoretical part specifies under what conditions ethnic differences undermine public goods provision and exacerbate ethnic discrimination. It posits that people cooperate more with and discriminate less against the groups expected to reciprocate cooperative behavior. Conditional cooperators rationally update their group stereotypes based on their experience with the groups' individual members. This change in turn reduces prejudice and discrimination. I tested observable implications of the model on a representative sample of more than 400 slum-dwellers in Mumbai. The field research in India combined laboratory experiments, an original survey, and interviews. Once I manipulated expectations of reciprocity, ethnically heterogeneous groups produced as much public goods as the homogeneous ones. The experimental treatment also radically increased trust and reduced ethnic discrimination of the generally mistrusted Muslim minority. The survey analysis compared the real-life effect of reciprocity with prominent alternative explanations from the literature. Compared to other factors, positive reciprocity provides a powerful explanation of why people choose to discriminate against some, but not other ethnic groups. The cross-national chapter of the dissertation extends the analysis beyond India. Using surveys from 87 countries, it shows that generalized trust moderates the negative effect of ethnic diversity on people's willingness to contribute to public goods.