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Symbols, Group Identity and the Hold-up Problem

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Abstract

Groups, companies, and organizations identify themselves via symbols. Symbols have the potential to create group identity and at the same time create group boundaries, thus allowing for achieving the benefits of cooperation by ingroup members. We use a laboratory experiment to study the role of group identity, created by the use of symbols, in mitigating the hold-up problem. As a team symbol we employ color t-shirts. We find that the usage of t-shirts itself does not create a strong enough group identity to mitigate the hold-up problem. However, in our previous research, we found that group identity created by t-shirts and a group chat aimed to help team members to solve a task is capable of resolving the hold-up problem. These findings are consistent with the everyday practice where organizations often make significant investments in team-building and socialization activities, suggesting that an important objective of such activities might be to strengthen group identity so that it is effective even in highly strategic environments.

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  • Hodaka Morita & Maroš Servátka, 2011. "Symbols, Group Identity and the Hold-up Problem," Working Papers in Economics 11/38, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:11/38
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    File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/1138.pdf
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    1. Eckel, Catherine C. & Grossman, Philip J., 2005. "Managing diversity by creating team identity," Journal of Economic Behavior & Organization, Elsevier, vol. 58(3), pages 371-392, November.
    2. Yan Chen & Sherry Xin Li, 2009. "Group Identity and Social Preferences," American Economic Review, American Economic Association, vol. 99(1), pages 431-457, March.
    3. Morita, Hodaka & Servátka, Maroš, 2013. "Group identity and relation-specific investment: An experimental investigation," European Economic Review, Elsevier, vol. 58(C), pages 95-109.
    4. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    More about this item

    Keywords

    altruism; experiment; group identity; hold-up problem; other-regarding preferences; relation-specific investment; symbols; team membership;

    JEL classification:

    • 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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