Does Ethnic Diversity Always Undermine Pro-Social Behavior? Evidence from a Laboratory Experiment

A large body of literature concludes a negative association between ethnic diversity and pro-social behavior. Inspired by the works suggesting that the costly punishment would sustain the contribution level in public goods experiment, we compare the economic behavior of Mongolian- and Han-Chinese and investigate how ethnic diversity would affect contribution, punishment, and the marginal effect of punishment on contribution. We find that the association between ethnic diversity and pro-social behavior is not a simple negative relationship but rather depends on both cultural traits and ethnic fusion when we take punishment opportunity into consideration. Ethnic diversity may help promote contribution, alleviate the punishment level, and increase the efficiency of introducing a punishment mechanism in some circumstances.