Cooperation in the prisoner’s dilemma is possible if interactions are sufficiently correlated. We show that when conditions favorable to the evolution of cooperation hold (rb > c) tag-based strategies dominate. Thus, well-meaning interventions aimed at promoting cooperation may succeed but will often lead to in-group favoritism and ethnocentric behavior. Exploring ways that promote cooperation but do not usher in tag-based strategies should be a focal point of future work on the evolution of cooperation.