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In two experiments we show that the context in which groups are perceived influences how they are judged in a compensatory manner on the fundamental dimensions of social judgment, that is, warmth and competence. We manipulate the type of country (high in competence and low in warmth vs. high in warmth and low in competence) to which a target country is compared. Our data show that the target country is perceived as warmer and less competent when the comparison country is stereotypically high (vs. low) in competence and low (vs. high) in warmth. We also found compensation correlationally across targets and across dimensions in that the higher the comparison country is rated on one of the two dimensions, the higher the target country is rated on the other. Compensation effects are shown to affect judgments of both the ingroup (Experiment 1) and an outgroup (Experiment 2). Our results shed new …