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Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making

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  • Jackson, Matthew O.
  • Fryer Jr., Roland G.

Abstract

This paper introduces a psychological notion of categorization into economics and derives its implications for economic decision making. We show, using a tractable model of social cognition, that a decision maker in (efficiently) assigning past experiences to categories, will sort experiences of interaction with larger (majority) groups more finely than experiences with smaller (minority) groups. We then apply the model to understand simple forms of discrimination and social identity. It is shown that discrimination in hiring can result from such cognitive processes even when there is no malevolent taste to do so and workers' qualifications are fully observable. The model also provides a framework that is equipped to investigate the social psychological
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Suggested Citation

  • 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.
  • Handle: RePEc:clt:sswopa:1144
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    References listed on IDEAS

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    1. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
    2. Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
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    6. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
    7. Phipps Arabie, 1991. "Was euclid an unnecessarily sophisticated psychologist?," Psychometrika, Springer;The Psychometric Society, vol. 56(4), pages 567-587, December.
    8. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, May.
    9. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
    10. Roland G. Fryer & Steven D. Levitt, 2004. "Understanding the Black-White Test Score Gap in the First Two Years of School," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 447-464, May.
    11. Kim-Sau Chung, 2000. "Role Models and Arguments for Affirmative Action," American Economic Review, American Economic Association, vol. 90(3), pages 640-648, June.
    12. Hanming Fang, 2001. "Social Culture and Economic Performance," American Economic Review, American Economic Association, vol. 91(4), pages 924-937, September.
    13. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 37-82.
    14. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
    15. repec:fth:harver:1908 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Houy, Nicolas, 2006. "Exclusion by cognitive limitation," Economics Letters, Elsevier, vol. 90(3), pages 317-320, March.
    2. Maarten Vendrik & Christiane Schwieren, 2010. "Identification, screening and stereotyping in labour market discrimination," Journal of Economics, Springer, vol. 99(2), pages 141-171, March.
    3. Roland Bénabou & Jean Tirole, 2007. "Identity, Dignity and Taboos: Beliefs as Assets," Carlo Alberto Notebooks 50, Collegio Carlo Alberto.
    4. Dev, Pritha, 2014. "Identity and fragmentation in networks," Mathematical Social Sciences, Elsevier, vol. 71(C), pages 86-100.
    5. Levitt, Steven D, 2004. "Testing Theories of Discrimination: Evidence from Weakest Link," Journal of Law and Economics, University of Chicago Press, vol. 47(2), pages 431-452, October.
    6. Roland G. Fryer Jr., 2007. "Guess Who's Been Coming to Dinner? Trends in Interracial Marriage over the 20th Century," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 71-90, Spring.
    7. Ben-Ner, Avner & McCall, Brian P. & Stephane, Massoud & Wang, Hua, 2009. "Identity and in-group/out-group differentiation in work and giving behaviors: Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 153-170, October.
    8. Hanming Fang & Glenn C. Loury, 2004. "Toward an Economic Theory of Dysfunctional Identity," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-146, Boston University - Department of Economics.
    9. Stefano DellaVigna & Matthew Gentzkow, 2010. "Persuasion: Empirical Evidence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 643-669, September.
    10. Avner Ben-Ner & Brian McCall & Massoud Stephane & Hua Wang, "undated". "Identity and Self-Other Differentiation in Work and Giving Behaviors: Experimental Evidence," Working Papers 0805, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
    11. Jacques, Jean-François & Walkowiak, Emmanuelle, 2009. "Low wages and high unemployment rates: The role of social interactions in hiring discrimination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 456-463, June.
    12. Basu, Kaushik, 2006. "Identity, Trust and Altruism: Sociological Clues to Economic Development," Working Papers 06-05, Cornell University, Center for Analytic Economics.
    13. Kaushik Basu, 2007. "Identity and altruism: The Moral basis of prosperity and oppression," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-08, Indian Statistical Institute, New Delhi, India.
    14. Kaushik Basu, 2005. "Racial conflict and the malignancy of identity," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 3(3), pages 221-241, December.
    15. Dev, Pritha, 2010. "Identity and Fragmentation in Networks," MPRA Paper 21632, University Library of Munich, Germany.
    16. Yaron Azrieli & Ehud Lehrer, 2004. "Categorization generated by prototypes -- an axiomatic approach," Game Theory and Information 0405003, EconWPA.
    17. Basu, Kaushik, 2006. "Participatory Equity, Identity, and Productivity: Policy Implications for Promoting Development," Working Papers 06-06, Cornell University, Center for Analytic Economics.
    18. Dev, Pritha, 2010. "Choosing `Me' and `My Friends': Identity in a Non-Cooperative Network Formation Game with Cost Sharing," MPRA Paper 21631, University Library of Munich, Germany.
    19. Ben-Ner, Avner, 2013. "Preferences and organization structure: Toward behavioral economics micro-foundations of organizational analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 87-96.
    20. Oxoby, Robert J & Finnigan, Hugh, 2005. "Developing Heuristic-Based Quality Judgements: Attention Blocking in Consumer Choice," MPRA Paper 1523, University Library of Munich, Germany.
    21. Antecol, Heather & Cobb-Clark, Deborah A., 2008. "Identity and racial harassment," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 529-557, June.
    22. repec:dau:papers:123456789/1902 is not listed on IDEAS

    More about this item

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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