Abstract: Does cooperation and prejudice reduction go hand-in-hand as outcomes when fostering intergroup contact? Both academics and policy practitioners explore and promote intergroup contact in diverse populations to reduce prejudice, à la contact theory hypothesis, and also to promote cooperation. Studies have shown that contact can reduce prejudiced attitudes towards the outgroup, but can they bring about costly behavior needed for cooperation? I argue intergroup contact changes prejudiced attitudes and willingness to cooperate with the outgroup through different paths. In a program designed to promote intergroup contact between refugees and Ugandan nationals through farmer groups, I find that while Ugandan nationals in mixed groups (with both refugee and Ugandan national members) are more accepting of refugees as individuals, they are less willing to share resources and cooperate with the out-group, than those in homogeneous groups. To explain this contradictory result, I argue that while contact might reduce prejudice, it might not necessarily improve cooperation. I hypothesize that people in diverse groups get "trapped" in a non-cooperative equilibrium because baseline expectations and strategies of cooperation are mismatched, which likely leads to increased uncertainty. Through vignette experiments, I find that nationals and refugees have mismatched baseline expectations of the outgroup's work effort. While Ugandan nationals have a lower expectation of refugees' work effort contributions compared to co-nationals, refugees have the same expectation for both the ingroup and outgroup. As a result, they play different strategies of cooperation - refugees punish the outgroup more harshly than nationals do, and nationals reward the outgroup less than refugees do.
