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Identity and altruism: The Moral basis of prosperity and oppression

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  • Kaushik Basu

    ()
    (Cornell University
    Indian Statistical Institute, New Delhi)

Abstract

Much of economics is built on the assumption of individuals being driven by self-interest and economic development as an outcome of the free play of such individuals. On the few occasions that economics recognizes the role of altruism and trust, the tendency is to build these from the axiom of individually selfishness. The aim of this paper is to break away from this individualistic tradition and to treat as a primitive that individuals have hard-wired in them the `cooperative spirit', which allows them often to work in their collective interest, even when that may not be in their self-interest. The main objective of the paper is to track the interface between altruism and group identity. By using the basic structure of a Prisoner's Dilemma game among randomly picked individuals and building into it assumptions of general or in-group altruism, the paper demonstrates how our selfish rationality interacts with our innate sense of cooperation. The model is used to outline circumstances under which cooperation will occur and circumstances where it will break down. The paper also studies how sub-groups of a society can form cooperative blocks, whether to simply do better for themselves or exploit others.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 08-08.

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Length: 30 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:ind:isipdp:08-08

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Keywords: cooperative spirit; altruism; identity; development; Prisoner's Dilemma;

References

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  1. Ernst Fehr & Armin Falk, 2002. "Psychological Foundations of Incentives," CESifo Working Paper Series 714, CESifo Group Munich.
  2. George A. Akerlof & Rachel E. Kranton, 2000. "Economics And Identity," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 715-753, August.
  3. Ernst Fehr & Simon Gaechter, 1999. "Cooperation and Punishment in Public Goods Experiments," CESifo Working Paper Series 183, CESifo Group Munich.
  4. Sandeep Baliga & Tomas Sjostrom, 2001. "Arms Races and Negotiations," NajEcon Working Paper Reviews 391749000000000005, www.najecon.org.
  5. Kaushik Basu, 2005. "Racial conflict and the malignancy of identity," Journal of Economic Inequality, Springer, vol. 3(3), pages 221-241, December.
  6. Jackson, Matthew O. & Fryer Jr., Roland G., 2002. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," Working Papers 1144, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Lanse Minkler, 2002. "Shirking and Motivation in Firms: Survey Evidence on Worker Attitudes," Working papers 2002-37, University of Connecticut, Department of Economics.
  8. Roland Bénabou & Jean Tirole, 2005. "Incentives and Prosocial Behavior," NBER Working Papers 11535, National Bureau of Economic Research, Inc.
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  10. Qizilbash, Mozaffar, 2002. "Rationality, comparability and maximization," Economics and Philosophy, Cambridge University Press, vol. 18(01), pages 141-156, April.
  11. Pierpaolo Battigalli & Martin Dufwenberg, 2005. "Dynamic Psychological Games," Levine's Bibliography 784828000000000046, UCLA Department of Economics.
  12. Basu, Kaushik, 2006. "Coercion, Contract and the Limits of the Market," Working Papers 06-01, Cornell University, Center for Analytic Economics.
  13. Francois, P. & Zabojnik, J., 2003. "Trust, Social Capital and Economic Development," Discussion Paper 2003-116, Tilburg University, Center for Economic Research.
  14. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, vol. 83(5), pages 1281-1302, December.
  15. Erzo F.P. Luttmer, 1999. "Group Loyalty and the Taste for Redistribution," JCPR Working Papers 61, Northwestern University/University of Chicago Joint Center for Poverty Research.
  16. Robert H. Frank & Thomas Gilovich & Dennis T. Regan, 1993. "Does Studying Economics Inhibit Cooperation?," Journal of Economic Perspectives, American Economic Association, vol. 7(2), pages 159-171, Spring.
  17. Darity, William Jr. & Mason, Patrick L. & Stewart, James B., 2006. "The economics of identity: The origin and persistence of racial identity norms," Journal of Economic Behavior & Organization, Elsevier, vol. 60(3), pages 283-305, July.
  18. Loewenstein, George & O'Donoghue, Ted, 2004. "Animal Spirits: Affective and Deliberative Processes in Economic Behavior," Working Papers 04-14, Cornell University, Center for Analytic Economics.
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