Ingroup Bias in a Social Learning Experiment

Abstract

Does social learning and subsequent private information processing differ depending on whether the observer shares the same group identity as the predecessor whose actions are observed? In this paper, we conduct a lab experiment to answer this question, in which subjects first observe a social signal and then receive a private signal. We find that subjects put greater weights on the social signal if they share with the predecessor the same group identity that is induced in the experimental environment. We also provide suggestive evidence that such ingroup bias cannot be explained by an ingroup-outgroup difference in beliefs of the predecessor’s rationality. Moreover, heterogeneous effects of group identity exist in weights given to the subsequent private signal: Compared to when the predecessor is an outgroup, those who have learned from an ingroup predecessor put a greater (smaller) weight on the private signal if it contradicts (confirms) the social signal. We conjecture that such group effects are consistent with that group identity is a framing device that can be easily replaced by alternative decision heuristics.