Essays on Group Identity and Social Preferences

Yi Tian

Advisor: Daniel E Houser, PhD, Department of Economics

Committee Members: Kevin A. McCabe, Johanna B. Mollerstrom

Vernon Smith Hall (formerly Metropolitan Building), #5075
April 11, 2024, 08:00 AM to 10:00 AM

Abstract:

This dissertation focuses on the effect of group identity on social preferences. In particular, I examine different ways of building group identity and how it affects economic decisions. The first chapter examines whether anticipated future interaction can serve as a method to build group identity. The second chapter explores how anticipated future interaction can alter social distance. The third chapter investigates the economic consequences of losing group identity.

The first chapter tests the effect of anticipated future interaction on parochial altruism. Societies are often divided along racial, religious, or linguistic-national lines, as seen in regions such as the United States, Northern Ireland, and Belgium. This study aims to explore the potential for overcoming these divisions by focusing on the impact of anticipated future interactions on group dynamics, an area not previously explored in the economic literature. Using a laboratory experiment, the study examines social identity theory by forming groups based on people's anticipated future interactions. The study hypothesizes that participants will show ingroup favoritism toward those with whom they expect to interact and outgroup discrimination towards those with whom they do not. The hypothesis is tested by modifying an experimental design to incorporate group structure based on anticipated future interactions. Results indicate that the expectation of future interaction significantly influences group identity and can induce parochial altruism. Participants showed distributive and reciprocal preferences toward those with whom they expected to interact in the future. They were also more likely to make decisions that promoted the social welfare of these individuals, leading to increased income when paired with them. Findings suggest that policies aimed at improving intergroup relations could focus on shifting people's expectations about future interactions, thereby promoting greater social integration.

Chapter Two examines the influence of expected intergroup relations on individuals' altruistic behavior in the ultimatum game. In this study, participants were divided into two phases: the Individual Ultimatum Game (IUG) and the Group Ultimatum Game (GUG). In the IUG phase, participants were aware that they would form a group with their opponents in the GUG phase. Results indicate that the anticipated group relationship reduces social distance and influences proposers' altruism in the IUG. In addition, the study examined the effects of gender and stake size on altruistic behavior.

Chapter Three investigates the economic consequences of identity dissipation. Occasionally, people experience a loss of identity, whether through a relationship breakup or a move that physically separates them from old friends. While most sociological and psychological studies focus on how individuals feel after losing certain relationships, there is currently no economic research aimed at understanding how people's social preferences change after they are no longer members of a particular group. Do they continue to view their former group as an in-group and maintain in-group preferences toward their former group members? To answer this question, the experimenter creates a group identity in the laboratory and then measures participants' preferences for their in-group members and for out-group members. The experimenter then disrupts the initial identity and tests whether individuals still have a similar preference for the in-group or out-group. If the initial identity is not disrupted and participants remain in the original group, the experimenter tests whether there is continued preference for the in-group and discrimination against the out-group. The results of this experiment will shed light on ways to help individuals manage intergroup relations in the event of identity loss.