The Economic Impacts of Ethnic In-group Bias: A Case Study Analysis
33 Pages Posted: 20 Jul 2020
Date Written: June 23, 2020
This paper explores how in-group bias affects the economic decisions of agents in ethnically heterogeneous societies, as well as the economic consequences of these decisions. We study these connections by examining a corporate litigation case in Nigeria and the in-group sentiments expressed on Twitter as the events unfolded. The findings from analyzing user tweets show that affective identity sentiments were used to galvanize ethnic in-group members to support a boycott targeted towards a firm involved in the litigation. Importantly, we find that the boycott campaign had a negative and statistically significant effect on the shareholder wealth of the target firm. These findings suggest that in countries where there are significant ethnic differences and strong disparities, group-based biases can have considerable economic ramifications.
Keywords: In-group bias, Event study, Sentiment analysis, Boycotts, Social media, Stock return
JEL Classification: D91, G14, Z13
Suggested Citation: Suggested Citation