In-group punishment in international relations: US reactions to the founding of China’s AIIB

We examine, in the context of international relations, the hypothesis from social psychology that punishment for defiance is more likely for in-group than out-group members. The United States publicly opposed the founding of the Asian Infrastructure Investment Bank (AIIB) and pressured countries not to join the Chinese-led institution. Nevertheless, 57 countries became founding members of this new development bank—a potential competitor of the US-led World Bank. To test whether the United States punished in-group rather than out- group countries for their defiance, we consider a unique dataset on the voting behavior of the US executive director at the World Bank. We find that the United States is more likely to withhold support for new projects only for AIIB founding members that are closer to the United States, with no punishment for the more distant founders. Considering that almost all proposals are approved regardless of US support, the punishment appears merely gestural, making it even more surprising that the United States imposes it so judiciously. We suspect the action serves as a signal of discontent specifically directly toward in-group countries.