The anatomy of distributional preferences with group identity

Abstract

This paper dissects distributional preferences with group identity in a modified dictator game. I estimate individual-level utility functions with two parameters that govern the trade-o↵s between equity and e ciency and giving to self and to other. Subjects put on average less weight on income of the out-group, but overall only a minority behaves completely selfishly. Giving to the out-group also renders subjects more accepting of inequality. However, the experiment also uncovers a large heterogeneity of preferences. It seems that those who are social become slightly less social in the presence of the out-group. The number of selfish individuals is instead hardly a↵ected. Moreover, choices in both treatments overwhelmingly stem from well-behaved, yet systematically di↵erent underlying social preference functionals. Hence this experiment suggests that the rational choice approach, which is predominantly used in the literature, is a useful tool to understand the e↵ect of group identity on social preferences. As a side result, I find that the weight on self, but not the individual equity-e ciency trade-o↵, predicts political left-right self-assessment as more conservative voters are more selfish. I also document gender di↵erences: females put less weight on self, are more inequality averse and react more strongly to the treatment.

Markets Reduce Discrimination

“…Even though minimal groups induced via preferences for paintings are purposefully designed to be meaningless, there is overwhelming evidence that people react to such groups in predictable and economically relevant ways. In particular, membership in such artificial groups leads people to behave more altruistically towards members of the ingroup (Chen and Li, 2009;Paetzel and Sausgruber, 2018;Müller, 2019), changes the degree of pro-socialness as well as the distribution of equity-efficiency trade-offs (Müller, 2019), affects the decision-making process beyond the direct effect on the utility function (Le Coq, Tremewan, and Wagner, 2015), improves coordination (Chen and Chen, 2011), decreases trust towards the outgroup (Hargreaves Heap and Zizzo, 2009), increases competitiveness (Cornaglia, Drouvelis, and Masella, 2019) and distorts beliefs (Cacault and Grieder, 2019). An alternative approach to creating groups would be to rely on natural identities, such as gender or race, potentially via priming.…”

“…Social group membership has been shown to matter in economic games by Chen and Li (2009). Müller (2019) finds that selfishness and equity-efficiency concerns interact in particular ways with social group membership. We allow the utility of each option to depend on three arguments: own payoff, egalitarian preferences and the identity of the corresponding passive participant.…”

Giving to versus Taking from In- and Out-Group Members

“…Additionally, when introducing social group context to the task, subjects are no longer confronted with a fully anonymous counterpart, but rather act within an environment of observable group identities. Former studies suggest that group identity variations are able to evoke significant differences in behavior [15,16,31,[40][41][42]. In particular, the compliance with social norms is likely to vary depending on the group identities.…”

How Did We Do? The Impact of Relative Performance Feedback on Intergroup Hostilities

“…preferences (Akerlof and Kranton 2000, Shayo 2009, Bernard et al 2016 and past research advocating that di↵erences in the strength of identification constitute as a natural source of variation in behavior (Kranton et al 2016, Müller 2019, Hett et al 2019.…”