Race and trust in post-apartheid South Africa

I examine the impact of racial identity on behavior in trust games played by White, Black and Colored high school students in South Africa. There is a systematic pattern of distrust towards Black partners, even by Black proposers, partially attributable to mistaken expectations. White proposers are significantly less likely to engage in a strategic interaction at all when paired with a Black partner, while Colored and Black proposers engage in exchange but at lower levels than when paired with nonBlacks. However, greater racial diversity in schools and friendship groups is positively and significantly associated with greater trust towards Black partners.