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Toward An Economic Theory of Dysfunctional Identity

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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 Cowles Foundation for Research in Economics, Yale University in its series Cowles Foundation Discussion Papers with number 1483.

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Length: 48 pages
Date of creation: Sep 2004
Date of revision:
Publication status: Published in Christopher B. Barrett (ed.), The Social Economics of Poverty: On Identities, Groups, Communities and Networks, Routledge, 2005, pp. 12-55
Handle: RePEc:cwl:cwldpp:1483

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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Keywords: Identity; Dysfunctional Collective Identity;

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References

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  1. George A. Akerlof, 1997. "Social Distance and Social Decisions," Econometrica, Econometric Society, vol. 65(5), pages 1005-1028, September.
  2. 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.
  3. Roland G. Fryer & Matthew O. Jackson, 2002. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," Microeconomics 0211002, EconWPA.
  4. Bernheim, B Douglas, 1994. "A Theory of Conformity," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 841-77, October.
  5. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  6. Benoit, Jean-Pierre & Krishna, Vijay, 1985. "Finitely Repeated Games," Econometrica, Econometric Society, vol. 53(4), pages 905-22, July.
  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. Brock,W.A. & Durlauf,S.N., 2005. "Social interactions and macroeconomics," Working papers 5, Wisconsin Madison - Social Systems.
  3. Bernard, Tanguy & Dercon, Stefan & Taffesse, Alemayehu Seyoum, 2012. "Beyond fatalism: An empirical exploration of self-efficacy and aspirations failure in Ethiopia:," ESSP working papers 46, International Food Policy Research Institute (IFPRI).
  4. Tewodaj Mogues & Michael Carter, 2005. "Social capital and the reproduction of economic inequality in polarized societies," Journal of Economic Inequality, Springer, vol. 3(3), pages 193-219, December.

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