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Social Centipedes: the Impact of Group Identity on Preferences and Reasoning

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  • Le Coq, Chloe

    ()
    (Stockholm Institute of Transition Economics)

  • Tremewan, James

    ()
    (Department of Economics, University of Vienna (Austria))

  • Wagner, Alexander K.

    ()
    (Department of Economics, University of Cologne (Germany))

Abstract

Using a group identity manipulation we examine the role of social preferences in an experimental one-shot centipede game. Contrary to what social preference theory would predict, we find that players continue longer when playing with outgroup members. Our explanation rests on two observations: (i) players should only stop if they are sufficiently confident that their partner will stop at the next node, given the exponentially-increasing payoffs in the game, and (ii) players are more likely to have this degree of certainty if they are matched with someone from the same group, whom they view as similar to themselves and thus predictable. We find strong statistical support for this argument. We conclude that group identity not only impacts a player’s utility function, as identified in earlier research, but also affects her reasoning about the partner’s behavior.

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Bibliographic Info

Paper provided by Stockholm Institute of Transition Economics, Stockholm School of Economics in its series SITE Working Paper Series with number 24.

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Length: 33 pages
Date of creation: 30 Sep 2013
Date of revision:
Handle: RePEc:hhs:hasite:0024

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Postal: Stockholm Institute of Transition Economics, Stockholm School of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Phone: (+46 8) 736 9670
Fax: (+46 8) 31 64 22
Web page: http://www.hhs.se/site/
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Keywords: Group identity; centipede game; prospective reference theory;

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