Can interaction be the primary focus of in-group biases?

We present an experiment to determine whether in-group favoritism is driven by (i) a desire to be more generous to in-group members or (ii) a desire to eschew interacting with out-group members. We use a simple ultimatum game in which our treatment variable is the costly choice to interact with an in-group member. Our results suggest that rather than behaving more generously when interacting with in-group or out-group members, individuals may simply prefer interacting with an in-group member. Surprisingly, this discrimination does not result in larger ultimatum game offers, but in proposers reporting higher levels of subjective happiness with their payoffs.