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The anatomy of distributional preferences with group identity

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  • Daniel Müller

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Abstract

The increasing diversity of societies raises questions about the consequences for redistributive preferences. This paper assesses the impact of social identity on distributional preferences in a modified dictator game. I estimate individual-level utility functions with two parameters that govern the trade-offs between equity and efficiency and giving to self and to other. Subjects on average put less weight on income of the out-group. The out-group treatment also changes the distribution of equity-efficiency concerns. However, the experiment also uncovers a large individual heterogeneity of preferences. An analysis of GARP violations reveals that choices in both treatments overwhelmingly stem from well-behaved, yet systematically different underlying utility functions. Hence, the evidence presented here suggests that the rational choice approach is a useful tool for understanding the effect of social identity on preferences.

Suggested Citation

  • Daniel Müller, 2017. "The anatomy of distributional preferences with group identity," Working Papers 2017-02, Faculty of Economics and Statistics, University of Innsbruck, revised Mar 2017.
  • Handle: RePEc:inn:wpaper:2017-02
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    References listed on IDEAS

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    Cited by:

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    3. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).

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    More about this item

    Keywords

    Social identity; inequality; distributional preferences; GARP; rationality; in-groupÐoutgroup bias;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H80 - Public Economics - - Miscellaneous Issues - - - General

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