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Toward an Economic Theory of Dysfunctional Identity

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  • Hanming Fang

    ()
    (Department of Economics, Yale University)

  • Glenn C. Loury

    ()
    (Institute for Economic Development, Boston University)

Abstract

We advance a novel choice-theoretic model of “identity” based on the notions of categories and narratives. Identity is conceived as a matter of “reflexive perception” — how people understand themselves. Choosing an identity is equivalent to making a generalization about one’s past that highlights the most salient aspects of experience. When many individuals make a common choice in this regard, they embrace a collective identity which is dysfunctional if it is Pareto dominated by an alternative self-classificatory schema. Using a simple multi-stage risk sharing game, we explore conditions under which dysfunctional collective identities might be expected to emerge.

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Bibliographic Info

Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - The Institute for Economic Development Working Papers Series with number dp-146.

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Length: 47 pages
Date of creation: Nov 2004
Date of revision:
Handle: RePEc:bos:iedwpr:dp-146

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Keywords: Identity: dysfunctional collective identity;

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  1. Benoit, Jean-Pierre & Krishna, Vijay, 1985. "Finitely Repeated Games," Econometrica, Econometric Society, vol. 53(4), pages 905-22, July.
  2. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  3. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  4. Roland G. Fryer, Jr. & Matthew O. Jackson, 2003. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," NBER Working Papers 9579, National Bureau of Economic Research, Inc.
  5. Justine Burns, 2004. "Race and trust in post-apartheid South Africa," SALDRU/CSSR Working Papers 078, Southern Africa Labour and Development Research Unit, University of Cape Town.
  6. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  7. George A. Akerlof & Rachel E. Kranton, 2002. "Identity and Schooling: Some Lessons for the Economics of Education," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1167-1201, December.
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Cited by:
  1. Hanming Fang & Glenn C. Loury, 2005. ""Dysfunctional Identities" Can Be Rational," American Economic Review, American Economic Association, vol. 95(2), pages 104-111, May.
  2. Tanguy Bernard & Stefan Dercon & Alemayehu Seyoum Taffesse, 2011. "Beyond Fatalism - An empirical exploration of self-efficacy and aspirations failure in Ethiopia," CSAE Working Paper Series 2011-03, Centre for the Study of African Economies, University of Oxford.
  3. Mogues, Tewodaj & Carter, Michael, 2005. "Social capital and the reproduction of economic inequality in polarized societies," DSGD discussion papers 25, International Food Policy Research Institute (IFPRI).
  4. Brock,W.A. & Durlauf,S.N., 2005. "Social interactions and macroeconomics," Working papers 5, Wisconsin Madison - Social Systems.

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