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We propose a generic model that explains why political systems tend toward certain outcomes. The model identifies possible economic and psychological paths toward change in a metaphorical political economy consisting of farmers, bandits and soldiers. In addition to economic factors, we also consider how two psychological factors, broadly categorized as group identity and exposure to violence, affect the behavior of metaphorical agents. We find that though outcomes tend to be similar with and without the psychological influences, the psychological influences accelerate the adjustment process and create additional policy space for interventions. A methodological contribution of the paper also is the use of summary performance measures represented as phase plots that have the potential to be used with advantage in system dynamics analyses. Copyright © 2014 System Dynamics Society

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This paper presents an experiment measuring how lab-induced group identity affects trust and trustworthiness in a repeated trust game with random matching. Identity had positive in-group and negative out-group effects on trust. However, the in-group effect was small and statistically insignificant, while the out-group effect was large. Trustworthiness was determined mainly by reciprocity effects.