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Journal Article•DOI•

Individual Behavior and Group Membership

Gary Charness1, Luca Rigotti2, Aldo Rustichini3•
University of California, Santa Barbara1, University of Pittsburgh2, University of Minnesota3
21 Dec 2006-Social Science Research Network-
TL;DR: In this paper, the saliency of group membership was investigated in two strategic games, the Battle of the Sexes and Prisoner's Dilemma, and it was shown that saliency affects the perception of the environment.
Abstract: People who are members of a group and identify with it behave differently from people who perceive themselves as isolated individuals. This difference depends on two main factors. First, preferences over outcomes change with the degree of identification with the group. Second, this identification depends on the saliency of the group structure. This paper tests these hypotheses and shows that group membership affects preferences over outcomes, and saliency of the group affects the perception of the environment. In two strategic environments, Battle of the Sexes and Prisoner's Dilemma, we create groups by allocating subjects to be Row or Column players. We manipulate the saliency of group membership by letting a player's own group watch as a passive audience as decisions are made, and by making part of the payoff common for members of the group. There is a strong and significant effect of group membership: It increases the aggressive stance of the hosts (people who have their group members in the audience), and reduces the one of the guests. The effect on outcomes depends on the game: In the Battle of the Sexes, the aggressiveness of hosts leads to more coordination; in the Prisoner's Dilemma, it leads to less cooperation. In the first case efficiency is increased, while in the second it is diminished. We also test for differences between in-group and out-group behavior in Prisoner's Dilemma games. In contrast to the minimal-group paradigm of the social-psychology literature, minimal groups do not affect behavior in our strategic environment. We see strong differences between in-group and out-group behavior only when we increase the saliency of group membership by having a degree of common payoffs.

Summary (1 min read)

Jump to: [INSTRUCTIONS (room R)] and [INSTRUCTIONS]

INSTRUCTIONS (room R)

  • They have been randomly divided into two rooms, each with 10 people.
  • These are actual dollars that will be paid in cash.
  • All people in the room (except for the person from the other room) will be able to watch the decider who belongs to their room make his or her choice (however, no verbal comments are permitted).
  • Your green numbers indicate the rounds during which it will be your turn to make a decision in the room where you are now (room R).

INSTRUCTIONS

  • Thank you for participating in this experiment.
  • There are 20 people participating in this session.
  • There will be 10 rounds in this session, and each person will make a decision in each round.
  • In some periods, you will be paired with someone in your color group, while in other periods you will be paired with someone in the other color group.
  • Each person will be making a simultaneous choice between A and B in the following decision matrix:.

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APPENDIX A: Instructions
(Prisoner’s Dilemma)
INSTRUCTIONS (room R)
Thank you for participating in this experiment. You will receive $5 for your participation, in addition to other
money to be paid as a result of decisions made in the experiment.
There are 20 people participating in this session. They have been randomly divided into two rooms, each with 10
people. You are in room R, this means you are a Row decider.
There will be ten rounds in this session
, and each person will make two decisions, one in each room. You have a
card with a green number and a card with a (different) yellow number. These numbers will determine when and
where you make decisions.
Your green number indicates the round during which it will be your turn to make a decision in the room where
you are now (room R).
Your yellow number indicates the round during which it will be your turn to go to the other room (room C) and
make a decision there.
In each round there are two people making a decision. Each person will be making a simultaneous choice between A
and B in the following decision matrix:
Column
A B
A 5 , 5 1 , 7
Row
B 7 , 1 2 , 2
In each cell, the first number represents the outcome for the Row decider and the second number represents the
outcome for the Column decider.
Thus, if both people choose A, the Row decider receives 5 and the Column decider receives 5. If both people choose
B, the Row decider receives 2 and the Column decider receives 2. If the Row decider chooses A and the Column
decider chooses B, the Row decider receives 1 and the Column decider receives 7. If the Row decider chooses B and
the Column decider chooses A, the Row decider receives 7 and the Column decider receives 1.
The other nine members of each room also have a financial stake in the outcome – each person not making a
decision receives 1/3 of the amount shown for the realized outcome.
Thus, if both deciders choose A, every inactive person in room R receives 5/3 and every inactive person from room
C receives 5/3. If both deciders choose B, every inactive person from room R receives 2/3 and every inactive person
from room C receives 2/3. If the Row decider chooses A and the Column decider chooses B, every inactive person
from room R receives 1/3 and every inactive person from room R receives 7/3. If the Row decider chooses B and the
Column decider chooses A, every inactive person from room R receives 7/3 and every inactive person from room R
receives 1/3.
Each unit is worth $0.50 in actual money (2 units = $1) that will be paid in cash at the end of the experiment.
All people in the room (except for the person from the other room) will be able to watch the decider who belongs to
their room make his or her choice (however, no verbal comments are permitted).
The decision of the person who walks into the room, on the other hand, is made privately.
2
The outcome of the joint decision is immediately revealed to all people in the room.
After the 10 rounds are completed, we will total each person’s earnings (from the outcomes of the two self-made
decisions, as well as the other 18 outcomes), add the $5 show-up fee, and pay each person individually and
privately, using the numbers on your two cards to identify your decisions.
Please feel free to ask questions.
3
(Battle of the Sexes)
INSTRUCTIONS (room R)
Thank you for participating in this experiment. You will receive $5 for your participation, in addition to other
money to be paid as a result of decisions made in the experiment.
There are 20 people participating in this session. They have been randomly divided into two rooms, each with 10
people. You are in room R, this means you are a Row decider.
There will be ten rounds in this session
, and each person will make two decisions, one in each room. You have a
card with a green number and a card with a (different) yellow number. These numbers will determine when and
where you make decisions.
Your green number indicates the round during which it will be your turn to make a decision in the room where
you are now (room R).
Your yellow number indicates the round during which it will be your turn to go to the other room (room C) and
make a decision there.
In each round there are two people making a decision. Each person will be making a simultaneous choice between A
and B in the following decision matrix:
Column
A B
A 3 , 1 0 , 0
Row
B 0 , 0 1 , 3
In each cell, the first number represents the outcome for the decider Row and the second number represents the
outcome for the decider Column.
Thus, if both people choose A, the decider Row receives $3 and the decider Column receives $1. If both people
choose B, the decider Row receives $1 and the decider Column receives $3. If non-identical letters are chosen, each
decider receives 0. These are actual dollars that will be paid in cash.
The other nine members of each room also have a financial stake in the outcome – each person not making a
decision receives 1/3 of the amount shown for the realized outcome.
Thus, if both deciders choose A, every person in room R receives $1 and every person in room C receives $1/3. If
both deciders choose B, every person in room R receives $1/3 and every person in room C receives $1. If non-
identical letters are chosen, everyone receives 0. These are also actual dollars that will be paid in cash.
All people in the room (except for the person from the other room) will be able to watch the decider who belongs to
their room make his or her choice (however, no verbal comments are permitted).
The decision of the person who walks into the room, on the other hand, is made privately.
The outcome of the joint decision is immediately revealed to all people in the room.
After the 10 rounds are completed, we will total each person’s earnings (from the outcomes of the two self-made
decisions, as well as the other 18 outcomes), add the $5 show-up fee, and pay each person individually and
privately, using the numbers on your two cards to identify your decisions.
Please feel free to ask questions.
4
(Battle of the Sexes: No Shared payoff)
INSTRUCTIONS (room R)
Thank you for participating in this experiment. You will receive $8 for your participation, in addition to other
money to be paid as a result of decisions made in the experiment.
There are 20 people participating in this session. They have been randomly divided into two rooms, each with 10
people. You are in room R, this means you are a Row decider.
There will be 20 rounds in this session
, and each person will make four decisions, two in each room. You have a two
card with green numbers and two cards with (different) yellow numbers. These numbers will determine when and
where you make decisions.
Your green numbers indicate the rounds during which it will be your turn to make a decision in the room where
you are now (room R).
Your yellow numbers indicate the rounds during which it will be your turn to go to the other room (room C) and
make a decision there.
In each round there are two people making a decision in each room. Each person will be making a simultaneous
choice between A and B in the following decision matrix:
Column
A B
A 3 , 1 0 , 0
Row
B 0 , 0 1 , 3
In each cell, the first number represents the outcome for the Row decider and the second number represents the
outcome for the Column decider.
Thus, if both people choose A, the Row decider receives 3 and the Column decider receives 1. If both people
choose B, the Row decider receives 1 and the Column decider receives 3. If the Row decider chooses A and the
Column decider chooses B, the Row decider receives 0 and the Column decider receives 0. If the Row decider
chooses B and the Column decider chooses A, the Row decider receives 0 and the Column decider receives 0. The
payment to the other people in the room is not affected by what the two people playing choose to do.
Each unit is worth $1 in actual money that will be paid in cash at the end of the experiment.
All people in the room (except for the person from the other room) will be able to watch the decider who belongs to
their room make his or her choice (however, no verbal comments are permitted).
The decision of the person who walks into the room, on the other hand, is made privately.
The outcome of the joint decision is immediately revealed to all people in the room.
After the 20 rounds are completed, we will total each person’s earnings and pay each person individually and
privately, using the numbers on your four cards to identify your decisions.
Please feel free to ask questions.
5
(Split audience)
INSTRUCTIONS (room R)
Thank you for participating in this experiment. You will receive $5 for your participation, in addition to other
money to be paid as a result of decisions made in the experiment.
There are 32 people participating in this session. They have been randomly divided into two rooms, each with 16
people. You are in room R, this means you are a member of the Row group.
Half of the people in this room will function as the audience and the other half of the people in this room will make
decisions. The people in the audience will remain in Room R, while the deciders will wait in another room until it is
time for their decisions.
There will be eight rounds in this session
, and each non-audience person will make two decisions, one in each room.
Such people will have a card with a green number and a card with a (different) yellow number. These numbers will
determine when and where they shall make decisions.
For the deciders:
The green number indicates the round during which it will be time to make a decision in the room where you are
now (room R).
The yellow number indicates the round during which it will be time to go to the other room (room C) and make a
decision there.
In each round there are two people making a decision in each room. Each person will be making a simultaneous
choice between A and B in the following decision matrix:
Column
A B
A 3 , 1 0 , 0
Row
B 0 , 0 1 , 3
In each cell, the first number represents the outcome for the decider Row and the second number represents the
outcome for the decider Column.
The other 15 members of each room also have a financial stake in the outcome – each person not making a decision
receives 1/3 of the amount shown for the realized outcome.
Thus, if both deciders choose A, the Row decider receives $3 and the Column decider receives $1; every non-
decider in the Row group receives $1 and every non-decider in the Column group receives $1/3. If both deciders
choose B, the Row decider receives $1 and the Column decider receives $3; every non-decider in the Row group
receives $1/3 and every non-decider in the Column group receives $1. If non-identical letters are chosen, everyone
receives 0. These are actual dollars that will be paid in cash.
Each person making a decision in the room will pass, face down, one of the decision cards to the experimenter, who
will reveal the choices when both cards have been passed. All people in the room will be able to observe the
outcome. However, no verbal comments are permitted at any time during the experiment.
After the eight rounds are completed, we will total each person’s earnings, add the $5 show-up fee, and pay each
person individually and privately, using the numbers on your two cards to identify your decisions. Audience
members receive an extra $1.
Please feel free to ask questions.
Citations
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Journal Article•DOI•
Group Identity in Markets

[...]

Kutsal Dogan1, Ernan Haruvy2, Ernan Haruvy1, Sherry Xin Li1•
University of Texas at Dallas1, McGill University2
20 Feb 2009-Social Science Research Network
TL;DR: In this paper, the effects of group identity on market transactions in an oligopoly market with a few sellers and buyers were studied, and the authors found that the presence of groups influences both the selection of trade partners and the determination of prices.
Abstract: We present a laboratory experiment that measures the effects of group identity -- one's perceived membership in social groups -- on market transactions in an oligopoly market with a few sellers and buyers. We artificially induce group identity using art preferences and college majors in different treatments, respectively. Subjects are randomly assigned into the roles of buyers and sellers and interact repeatedly. We find that the presence of groups influences both the selection of trade partners and the determination of prices. All else equal, sellers are more likely to make offers to ingroup buyers, but this ingroup favoritism depends on the profile of seller-buyer intrinsic values. We also find that whenever buyers are more likely to accept offers from ingroup sellers, there are considerable ingroup-outgroup price differentials with outgroup sellers charging a lower price than ingroup sellers.

5 citations

Journal Article•DOI•
Other-Regarding Preferences, Group Identity and Political Participation: An Experiment

[...]

Pedro Robalo1, Arthur Schram2, Arthur Schram3, Joep Sonnemans3•
Max Planck Society1, Tinbergen Institute2, University of Amsterdam3
10 Jun 2013-Social Science Research Network
TL;DR: In this paper, a novel group identity induction procedure was proposed to create environments where in-group bias is either high or low, and the most competitive subjects participate much less often than other types, while the most altruistic subjects manage to sustain high participation levels.
Abstract: We experimentally study the relationship between other-regarding preferences, group identity and political participation. In doing so, we propose a novel group identity induction procedure that succeeds in creating environments where in-group bias is either high or low. At the individual level, we find that both altruistic subjects and group identifiers participate above average. The most competitive subjects participate much less often than other types, while the most altruistic subjects manage to sustain high participation levels. At the aggregate level, we observe only few statistically significant differences between environments where group identity is high and low. This suggests that the higher participation observed in field settings for close-knit (political) groups might be due to underlying mobilization processes rather than a heightened sense of group-belonging.

5 citations

Posted Content•
An Experimental Study on the Relevance and Scope of Culture as a Focal Point

[...]

Olga Bogach1, Andreas Leibbrandt2•
University of Hawaii1, University of Chicago2
01 Apr 2011-Research Papers in Economics
TL;DR: This paper showed that subjects are more likely to coordinate on the payoff-dominant equilibrium if the only piece of information they have about their partner is that they have the same nationality, while if they receive additional information about their partners, subjects are not more likely than others to coordinate.
Abstract: This paper uses an experimental approach to study whether nationality serves as a focal point. We let subjects from Japan, Korea, and China play stag-hunt coordination games in which we vary information about their partner. The results show that subjects are more likely to try to coordinate on the payoff-dominant equilibrium if the only piece of information they have about their partner is that they have the same nationality. However, if subjects receive additional information about their partner, subjects are not more likely to try to coordinate on the payoff dominant equilibrium. We also do not find that subjects are less likely to try to coordinate on the payoff-dominant equilibrium when their partner has a different nationality as compared to when the partner’s nationality is unknown. In addition, we observe that giving subjects information about their partner in general increases the risk of miscoordination. Thus, our findings suggest that nationality can serve as a coordination device but also that the scope of this device is limited.

5 citations

Cites background or methods from "Individual Behavior and Group Membe..."

  • ...We implemented the strategy method for the responders, i.e. responder had to decide over their minimal acceptable offer before they knew the actual offer of the proposer....

    [...]

  • ...In the ultimatum games a proposer has to decide how to divide ten tokens between her and a responder....

    [...]

  • ...Exceptions are Eckel and Grossman (2005) and Charness et al. (2007) which create minimal groups to study cooperation and increase group identity by team goal attainment or passive audiences....

    [...]

  • ...…on in- and out-group behavior (Sherif et al., 1961; Tajfel and Turner, 1979; Kollock, 1998; Eckel and Grossman, 2005; Goette et al., 2006; Charness et al., 2007; McLeish and Oxoby, 2007; Chen and Li, 2009) which typically reports that individuals treat in-group members better than…...

    [...]

Journal Article•DOI•
Is there no “I” in “Team”? Interindividual-intergroup discontinuity effect in a Cournot competition experiment

[...]

Israel Waichman1, Korbinian von Blanckenburg2•
Bard College Berlin1, Ostwestfalen-Lippe University of Applied Sciences2
01 Mar 2020-Journal of Economic Psychology
TL;DR: This paper examined the empirical scope of the unitary player assumption (alternatively the "interindividual-intergroup discontinuity effect") in the context of a Cournot competition experiment and found that individuals' decisions differ from those made by teams.

5 citations

Journal Article•
Psychological and Social Motivations in Microfinance Contracts: Theory and Evidence

[...]

Sanjit Dhami, Junaid Arshad, Ali al-Nowaihi
01 Jul 2019-Research Papers in Economics
TL;DR: In this article, the problem of effort choice under individual liability (IL) and joint liability (JL) contracts when loan repayments are made either privately, or publicly in front of one's social group was studied.
Abstract: Microfinance contracts have enormous economic and welfare significance. We study, theoretically and empirically, the problem of effort choice under individual liability (IL) and joint liability (JL) contracts when loan repayments are made either privately, or publicly in front of one’s social group. Our theoretical model identifies guilt from letting down the expectations of partners in a JL contract, and shame from falling short of normatively inadequate effort, under public repayment of loans, as the main psychological drivers of effort choice. Evidence from our lab-in-the-field experiment in Pakistan reveals large treatment effects and confirms the central roles of guilt and shame. Under private repayment, a JL contract increases effort by almost 100% relative to an IL contract. Under public repayment, effort levels are comparable under IL and JL contracts, which is consistent with recent empirical results. This indicates that shame-aversion plays a more important role as compared to guilt-aversion. Under IL, repayment in public relative to private repayment increases effort by 60%, confirming our shame-aversion hypothesis. Under JL, a comparison of private and public repayment shows that shame trumps guilt in explaining effort choices of borrowers.

5 citations

References
More filters
An integrative theory of intergroup conflict

[...]

Henri Tajfel, John C. Turner1•
Australian National University1
01 Jan 2001

14,106 citations

Journal Article•DOI•
Rediscovering the social group: A self-categorization theory.

[...]

John C. Turner, Michael A. Hogg, Penelope J. Oakes, Stephen Reicher, Margaret Wetherell 
01 Jul 1989-Contemporary Sociology
TL;DR: In this paper, a self-categorization theory is proposed to discover the social group and the importance of social categories in the analysis of social influence, and the Salience of social Categories is discussed.
Abstract: 1. Introducing the Problem: Individual and Group 2. Rediscovering the Social Group 3. A Self-Categorization Theory 4. The Analysis of Social Influence 5. Social Identity 6. The Salience of Social Categories 7. Social Identity and Group Polarization 8. Crowd Behaviour as Social Action 9. Conclusion.

8,872 citations

Journal Article•DOI•
Africa's Growth Tragedy: Policies and Ethnic Divisions

[...]

William Easterly1, Ross Levine2•
World Bank1, University of Virginia2
01 Nov 1997-Quarterly Journal of Economics
TL;DR: This article showed that ethnic diversity helps explain cross-country differences in public policies and other economic indicators in Sub-Saharan Africa, and that high ethnic fragmentation explains a significant part of most of these characteristics.
Abstract: Explaining cross-country differences in growth rates requires not only an understanding of the link between growth and public policies, but also an understanding of why countries choose different public policies. This paper shows that ethnic diversity helps explain cross-country differences in public policies and other economic indicators. In the case of Sub-Saharan Africa, economic growth is associated with low schooling, political instability, underdeveloped financial systems, distorted foreign exchange markets, high government deficits, and insufficient infrastructure. Africa's high ethnic fragmentation explains a significant part of most of these characteristics.

5,648 citations

"Individual Behavior and Group Membe..." refers background in this paper

  • ...1 Some notable exceptions include Akerlof and Kranton (2000), Alesina et alii (2003), and Easterly and Levine (1997)....

    [...]

Book•
The Principles of Scientific Management

[...]

Frederick Winslow Taylor
01 Jan 1911
TL;DR: The Taylor System as discussed by the authors was developed as a system for increasing productivity in industry, and its principles have been applied to all kinds of large-scale enterprises, including operations with departments and agencies of the federal government.
Abstract: This brief essay by the founder of scientific management has served for nearly a century as a primer for administrators and for students of managerial techniques. Although scientific management was developed primarily as a system for increasing productivity in industry, its principles have been applied to all kinds of large-scale enterprises, including operations with departments and agencies of the federal government. It is in this volume that Frederick Winslow Taylor gave the theory of scientific management its clearest airing. Born in 1856, Taylor began work at age eighteen as an apprentice to a pattern-maker and as a machinist. A few years later he joined the Midvale Steel Company as a laborer, and in eight years rose to chief engineer. During this time he developed and tested what he called the "task system," which became known as the Taylor System and eventually as scientific management. He made careful experiments to determine the best way of performing each operation and the amount of time it required, analyzing the materials, tools, and work sequence, and establishing a clear division of labor between management and workers. His experiments laid the groundwork for the principles that are expounded in this essay, which was first published in 1911.

5,361 citations

Journal Article•DOI•
Economics and Identity

[...]

George A. Akerlof1, Rachel E. Kranton2•
University of California, Berkeley1, University of Maryland, College Park2
01 Aug 2000-Quarterly Journal of Economics
TL;DR: In this paper, the authors consider how identity, a person's sense of self, affects economic outcomes and incorporate the psychology and sociology of identity into an economic model of behavior, and construct a simple game-theoretic model showing how identity can affect individual interactions.
Abstract: This paper considers how identity, a person's sense of self, affects economic outcomes. We incorporate the psychology and sociology of identity into an economic model of behavior. In the utility function we propose, identity is associated with different social categories and how people in these categories should behave. We then construct a simple game-theoretic model showing how identity can affect individual interactions. The paper adapts these models to gender discrimination in the workplace, the economics of poverty and social exclusion, and the household division of labor. In each case, the inclusion of identity substantively changes conclusions of previous economic analysis.

4,825 citations

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01 Aug 2000-Quarterly Journal of Economics
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Frequently Asked Questions (1)
Q1. What are the contributions in this paper?

In this paper, if both people choose A, the Row decider receives 5 and the Column deciders receives 5.