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

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 fnd that players continue longer when playing with outgroup members. The explanation we provide for this result rests on two observations: (i) players should only stop if they are suffciently conident 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 identifed in earlier research, but also affects her reasoning about her partner's behavior.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie1305.pdf
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Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 1305.

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Date of creation: Aug 2013
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Handle: RePEc:vie:viennp:1305
Contact details of provider: Web page: http://www.univie.ac.at/vwl

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  19. Gary Bornstein & Tamar Kugler & Anthony Ziegelmeyer, 2002. "Individual and Group Decisions in the Centipede Game: Are Groups More “Rational” Players?," Discussion Paper Series dp298, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
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