Naturally induced variation #1
Our primary identification strategy builds on the methodology used by Mani et al. (2013), in that we leverage seasonal variation in scarcity induced by the harvest. More specifically, we collect survey data from credit-constrained farmers in rural areas of Singida, Tanzania, before and after the Msimu harvest. The main crops in the areas are maize and sorghum, harvested from mid-May to June. The first round of our study takes place during the first week of May, just before the harvest. At this point in time, the farmers experience relative scarcity. They have fewer resources at hand, since they have not been able to realize the gains from the harvest yet. The harvest constitutes a substantial shock both in terms of food and cash. The second round of surveying is carried out in late June, when farmers live in relative abundance.
Experimental manipulation #1
Our first source of experimental variation in (perceived) scarcity comes from a randomized prime embedded in the survey. Before participating in the investment game, some farmers are exposed to a survey section asking questions about the current state of their economy and diet, whereas others are asked standard background questions on age, gender, etc. As a consequence of the prime, participants that currently face scarcity have an enhanced focus on this fact when playing the investment game. We test whether the heightened sense of scarcity increases the likelihood that participants choose to abstain from investing, i.e. choose not to cooperate.
Experimental manipulation #2
Our second source of experimental variation consists of randomly varying the counterpart that respondents face in the investment game (i.e., player B) between an ingroup and an outgroup member. While half of the participants are told that Player B is another (anonymous) person from their own village, the rest are told that Player B is from another part of Tanzania. We test whether people invest less when paired with an outsider and whether ingroup favoritism increases with scarcity.
Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. science, 341(6149), 976-980.