A note on mutually beneficial exchange and discrimination

• Author: Daniel Farhat,Thomas K. Duncan
• DOI: http://doi.org/10.1002/crq.21269
• Published date: 01 December 2019
• Date: 01 December 2019

RESEARCH ARTICLE

A note on mutually beneficial exchange and

discrimination

Thomas K. Duncan | Daniel Farhat

Department of Economics, Radford

University, Radford, Virginia

Correspondence

Thomas K. Duncan, Department of

Economics, Radford University, P.O. Box

6952, Radford, VA 24142.

Email: tduncan13@radford.edu

Abstract

We use Hammond and Axelrod's (Hammond, R. A. &

Axelrod, R. (2006). The evolution of ethnocentrism. Jour-

nal of Conflict Resolution, 50, 6: 926–936) agent-based

model of ethnocentrism to show how people's willingness

to cooperate with outsiders is affected by mutually benefi-

cial exchange. In environments where one person gains at

the expense of others (“charity economies”), we find dis-

crimination to be a dominant behavior. However, non-

discrimination becomes the dominant behavior when an

environment contains productive investment and mutually

beneficial exchange (“investment economies”). These

results point to market-improving policy prescriptions to

reduce racial/ethnic tension and the conflict that arise

from it.

KEYWORDS

agent-based modeling, discrimination, ethnocentrism, trade

1|INTRODUCTION

Sometimes people only engage in cooperative activities with members of their own racial/ethnic

group, excluding members from other groups (“discrimination”). This type of behavior is adverse as

it produces social and economic polarization, a noted source of conflict. The causes and the conse-

quences of discrimination are often linked to access to “resources”such as money, goods/services,

time, human/social capital, and a variety of other products that affect quality of life. In this note, we

seek to comment on a strand of research related to discrimination from an economic perspective with

emphasis on the short-run and long-run stability of discriminatory behavior. Using an agent-based

model of ethnocentrism constructed by Hammond and Axelrod (2006), we show that discrimination

evolves to become a dominant behavior in environments where one person gains at the expense of

Received: 22 July 2019 Revised: 4 September 2019 Accepted: 6 September 2019

DOI: 10.1002/crq.21269

Conflict Resolution Quarterly. 2019;37:169–176. wileyonlinelibrary.com/journal/crq © 2019 Wiley Periodicals, Inc. 169