In mixed‐motive interactions, defection is the rational and common response to the defection of others. In some cases, however, group members not only cooperate in the face of defection but also compensate for the shortfalls caused by others' defection. In one field and two lab studies, we examined when group members were willing to compensate for versus match defection using sequential dilemmas. We found that the level of identification with the broader group increased willingness to compensate for intragroup defection, even when it was personally costly. Compensating for a defecting partner's actions, however, is not an act of unconditional cooperation: It is accompanied by a lack of trust in the errant group member and a desire to be perceived as more ethical. Cooperation by others, on the other hand, is matched independent of whether the cooperator was an in‐group or out‐group member. We find similar patterns of compensation and matching when the personal cost involved contributing money or effort. Copyright © 2015 John Wiley & Sons, Ltd.