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Article - akerlof: economcis and identity

6 important questions on Article - akerlof: economcis and identity

There are specific identity-related behavior examples such as the following

• Identity can explain the behavior that appears detrimental

• Identity underlies a new type of externality

• It reveals a new way that preferences can be changed → changing social categories and associated prescriptions affect economic outcomes

• It is fundamental to behavior, the choice of it may be the most important economic decision people make

A general utility function is proposed such that it incorporations identity as a motivation for behavior. Uj=Uj(aj, a1-j, cj, Ij) where the utility function depends on j’s identity or self-image Ij, and his actions aj, and others actions a1-j.

A general utility function is proposed such that it incorporations identity as a motivation for behavior. Uj=Uj(aj, a1-j, cj, Ij) where the utility function depends on j’s identity or self-image Ij, and his actions aj, and others actions a1-j.

Psychology and Experiments on group Identification •

• Economists should consider identity as an argument in utility functions

• Competition is not necessary for group identification and its also the most minimal group assignment that can affect behavior

• “Groups” form by nothing more than random assignments of subject to labels → connecting rewards to what label you obtain.

Examples of Identity-related behavior

• Self-mutilation: tattoos, body piercings, male and female circumcision → all are physical markers of belonging more or less to an explicitly social category or group.
• Gender and occupation: female lawyer, a male nurse and woman marine… these are all combination you probably thought the opposite of (conjure contradictions)
• Alumni giving: helps institutions in the image (e.g attending an alumni event for Utrecht University after you graduate… if you graduate). The alumni giving enhances the value of a degree by maintaining the connection.

Gender-job association and sex discrimination law. •

• Legal interpretations of sex discrimination have corresponded to the earlier economic models. This concept occurs because jobs have gender associations.

• An example of this is in American World Airways. The airline wanted the prohibition of ale flight attendants because women were better at doing non-mechanical aspects of the job. This association, however, created an appeal on feminine traits and were deemed irrelevant to the main purpose of the services offered.

Read Akerlof & Kranton’s article on “Economics of Identity”. What are the main assumptions the authors make regarding the factors that affect a person’s utility function? Use the example of “gender identity” to explain the factors.

Social categories, C (each person has a conception of her own categories cj and that of all other people)
Prescriptions P (behaviour appropriate for people in different social categories)
Identity: Social status of a category is given by the self-image Ij(·), Identity depends on
• the extent to which j’s own given characteristics ej match the ideal of j’s assigned category, indicated by the prescriptions P.
• the extent to which j’s own and others’ actions correspond to prescribed behaviour indicated by P.

The question on the page originate from the summary of the following study material:

Games and Information An Introduction to Game Theory | 9781405136662 | Eric Rasmusen

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