We study ethno-linguistic diversity in a lab-in-the-field experiment in two bilingual societies, with (Bilbao, in the North of Spain) and without group conflict (Valencia, in the East). Participants from two ethno-linguistic cultures interact with other participants in Homogeneous (no diversity) or Mixed (ethno-linguistic diversity) environments. Participants allocate resources in a nested public goods game with a local and a global public good. By design, by not contributing to the global (and efficient) public good participants exclude the out- group from the benefits of their contribution. Our results show that while diversity reduces contributions to the global public good in Bilbao, it does not have a negative effect in Valencia. We interpret the results with a second experiment eliciting social norms, with different subjects, and find that the positive (negative) effects of diversity in Valencia (Bilbao) are linked to optimistic empirical expectations (normative discrimination). We also show how the prevalence of discriminatory norms is sensitive to additional information about behavior.
