We stress-test the limits of the power of group identity in the context of cooperation by constructing laboratory economies where participants confront an indefinitely repeated social dilemma as strangers. Group identity is artificially induced by random assignment to color-coded groups, and reinforced by an initial cooperation task played in-group and in fixed pairs. Subsequently subjects interact in-group and out-group in large economies, as strangers. Indefinite repetition guarantees full cooperation is an equilibrium. Decision-makers can discriminate based on group affiliation, but cannot observe past behaviors. We find no evidence of group biases. This suggests that group effects are less likely to emerge when players cannot easily observe and compare characteristics on which to base categorizations and behaviors.
Camera, G. & Hohl, L. (2021). Group-identity and long-run cooperation: an experiment. ESI Working Paper 21-10. https://digitalcommons.chapman.edu/esi_working_papers/347/