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

Author Info

Listed author(s):
  • 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

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File URL: http://econwpa.repec.org/eps/mic/papers/0211/0211002.pdf
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Paper provided by EconWPA in its series Microeconomics with number 0211002.

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Date of creation: 04 Nov 2002
Handle: RePEc:wpa:wuwpmi:0211002
Note: Type of Document - pdf. preliminary version - comments welcome
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Keywords: categorization; discrimination; bounded rationality;

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Find related papers by 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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  1. Jehiel, Philippe, 2005. "Analogy-based expectation equilibrium," Journal of Economic Theory, Elsevier, vol. 123(2), pages 81-104, August.
  2. George A. Akerlof & Rachel E. Kranton, 2000. "Economics and Identity," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 715-753.
  3. Phipps Arabie, 1991. "Was euclid an unnecessarily sophisticated psychologist?," Psychometrika, Springer;The Psychometric Society, vol. 56(4), pages 567-587, December.
  4. Moro, Andrea & Norman, Peter, 2004. "A general equilibrium model of statistical discrimination," Journal of Economic Theory, Elsevier, vol. 114(1), pages 1-30, January.
  5. Kim-Sau Chung, 2000. "Role Models and Arguments for Affirmative Action," American Economic Review, American Economic Association, vol. 90(3), pages 640-648, June.
  6. Gilboa,Itzhak & Schmeidler,David, 2001. "A Theory of Case-Based Decisions," Cambridge Books, Cambridge University Press, number 9780521802345, February.
  7. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
  8. Jackson, Matthew O. & Kalai, Ehud, 1997. "Social Learning in Recurring Games," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 102-134, October.
  9. Barberis, Nicholas & Shleifer, Andrei, 2003. "Style investing," Journal of Financial Economics, Elsevier, vol. 68(2), pages 161-199, May.
  10. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-571, June.
  11. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-661, September.
  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.
  13. Hanming Fang, 2001. "Social Culture and Economic Performance," American Economic Review, American Economic Association, vol. 91(4), pages 924-937, September.
  14. 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.
  15. repec:fth:harver:1908 is not listed on IDEAS
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