Group Identity and Relation-Specific Investment: An Experimental Investigation
AbstractThe hold-up problem has played a central role in the study of firm boundaries, which is a fundamental element of the economic study of organizations. We study a previously unex-plored mechanism by which integration between two parties could resolve the problem. Based on the social identity theory, we conjecture that group identity strengthens agents’ altruistic prefer-ences towards group members, and this helps resolve the hold-up problem. We test this conjec-ture in a laboratory experiment. Our subjects were randomly divided into two teams and asked to wear their team uniform. Task 1 required them to answer questions about trivia, where the sub-jects had access to a chat program that enabled them to help their team members. For Task 2, the subjects played a hold-up game with either a member of their own team (representing integra-tion) or a member of the other team (non-integration). The experimental results support our conjectures.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 12/16.
Length: 37 pages
Date of creation: 13 Nov 2012
Date of revision:
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altruism; experiment; hold-up problem; group identity; integration; other-regarding preferences; relation-specific investment; team membership;
Other versions of this item:
- Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
- Hodaka Morita & Maroš Servátka, 2011. "Group Identity and Relation-Specific Investment: An Experimental Investigation," Working Papers in Economics 11/01, University of Canterbury, Department of Economics and Finance.
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D20 - Microeconomics - - Production and Organizations - - - General
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
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