Group identity and social preferences (by Yan Chen and Sherry X. Li)
2021
Beyond a summary of the paper, this review of “Group Identity and Social
Preferences” by Yan Chen and Sherry X. Li highlights its exceptional impact on our
understanding of group-contingent social preferences. This paper has made an
important theoretical contribution by introducing group identity in the Charness
and Rabin model of social preferences. The core of the contribution is to show
experimentally that social identity influences distributional preferences,
reciprocity, and welfare-maximizing behavior. In particular, charity increases and
envy decreases when people are matched with an in-group compared to an out-group,
and people are more likely to reward and less likely to punish an in-group than an
out-group match. This paper has also contributed to methodological debates about
the use of minimal group identity in laboratory experiments. It has inspired many
research programs on the role of group-contingent preferences in various
dimensions of decision-making in society. It is also important to emphasize its
policy implications regarding how group-contingent social preferences could be
activated to improve efficiency and the quality of social interactions in our
segmented societies. This research agenda is more relevant than ever.
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