Answers are grounded in this paper and cite their sources.
We present the results of an experiment that attempts to measure the social value of groups. In the experiment, group membership is induced artificially: subjects interact with insiders and outsiders in trust games and periodically enter markets where they can trade group membership. We find that trust falls with groups because of negative discrimination against outsiders. Against this, however, there is evidence that group membership provides a psychological benefit, albeit one that may induce social inertia. Overall, the welfare effects of groups are at best neutral and could be negative. (JEL: D17, Z13)
No takes yet. Share an insight, caveat, or question.
Heap et al. (2009) studied this question.
Synapse has enriched 10 related papers. Consider them for comparative context: