The purpose of this research is to explain the force of the social interactions that display two pervasive phenomena; homophily and in- group bias which involve some degree of discrimination towards other, in the context of the poverty and pension game. In these gift giving settings where mutual gift giving is efficient but gifts are individually costly, we analyse the effects of in-group bias on reciprocity, rewarding and punishing attitudes. We address the mentioned effects by assign- ing participants randomly to play a pairwise gift giving game under two different scenarios; first all participants are identical (control) and second participants are assigned randomly to two groups (scenario II). These two scenarios are designed to investigate in-group bias where agents act differently when matched with agents of the same group. Then, we use an endogenous matching scenario where participants can choose to be matched with a participant of the same group (scenario III). This last scenario is designed to find evidence of homophily. Our results show that acts of reciprocity and altruism are more likely in the second scenario compared with the control treatment just like the average transfer amount.