Manipulation of in-group and out-group norms of discrimination and fairness allowed for the operation of competing social identity principles concerning in-group bias, conformity, and group distinctiveness. The combined effects of these principles on in-group bias were first examined in a modified minimal-group setting (Study 1). Results demonstrated that participants' allocation strategies were in accord with the in-group norm. Furthermore, dissimilar norms resulted in greater use of positive differentiation allocation strategies. However, in natural groups (Study 2), more in-group bias was found when both group norms were similar and discriminatory. The results confirm the importance of in-group norms and demonstrate differences between experimental and natural groups in the applicability of competing social identity and self-categorization principles.