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

Author

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  • Roland G. Fryer

    (University of Chicago)

  • Matthew O. Jackson

    (California Institute of Technology)

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

Suggested Citation

  • Roland G. Fryer & Matthew O. Jackson, 2002. "Categorical Cognition: A Psychological Model of Categories and Identification in Decision Making," Microeconomics 0211002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpmi:0211002
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    References listed on IDEAS

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    12. 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.
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    Cited by:

    1. 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).
    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. Dev, Pritha, 2014. "Identity and fragmentation in networks," Mathematical Social Sciences, Elsevier, vol. 71(C), pages 86-100.
    4. 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.
    5. Hanming Fang & Glenn C. Loury, 2004. "Toward An Economic Theory of Dysfunctional Identity," Cowles Foundation Discussion Papers 1483, Cowles Foundation for Research in Economics, Yale University.
    6. Basu, Kaushik, 2006. "Participatory Equity, Identity, and Productivity: Policy Implications for Promoting Development," Working Papers 06-06, Cornell University, Center for Analytic Economics.
    7. 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.
    8. Oxoby, Robert J & Finnigan, Hugh, 2005. "Developing Heuristic-Based Quality Judgements: Attention Blocking in Consumer Choice," MPRA Paper 1523, University Library of Munich, Germany.
    9. Kaushik Basu, 2013. "Group Identity, Productivity and Well-being Policy Implications for Promoting Development," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 14(3), pages 323-340, August.
    10. 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.
    11. Houy, Nicolas, 2006. "Exclusion by cognitive limitation," Economics Letters, Elsevier, vol. 90(3), pages 317-320, March.
    12. Benabou, Roland & Tirole, Jean, 2007. "Identity, Dignity and Taboos: Beliefs as Assets," IZA Discussion Papers 2583, Institute of Labor Economics (IZA).
    13. 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.
    14. 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.
    15. Stefano DellaVigna & Matthew Gentzkow, 2010. "Persuasion: Empirical Evidence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 643-669, September.
    16. 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.
    17. Basu, Kaushik, 2006. "Identity, Trust and Altruism: Sociological Clues to Economic Development," Working Papers 06-05, Cornell University, Center for Analytic Economics.
    18. 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.
    19. Dev, Pritha, 2010. "Identity and Fragmentation in Networks," MPRA Paper 21632, University Library of Munich, Germany.
    20. Yaron Azrieli & Ehud Lehrer, 2004. "Categorization generated by prototypes -- an axiomatic approach," Game Theory and Information 0405003, University Library of Munich, Germany.
    21. 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.
    22. 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.
    23. repec:dau:papers:123456789/1902 is not listed on IDEAS

    More about this item

    Keywords

    categorization; discrimination; bounded rationality;

    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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