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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
More filters
Dissertation•
Biases and discrimination : an economic analysis using lab and field experiments

[...]

Graeme Pearce
06 Sep 2016
TL;DR: In this paper, the authors use laboratory and field experiments to examine the underlying motivations that drive biased and discriminatory behaviour, focusing on the differential treatment of others that stems from individuals' preferences for particular social and ethnic groups.
Abstract: This thesis uses laboratory and field experiments to examine the underlying motivations that drive biased and discriminatory behaviour. Its focus is on the differential treatment of others that stems from individuals’ preferences for particular social and ethnic groups. The unifying theme of this thesis is the exploration of how such discriminatory tastes can manifest themselves within individuals’ social and other–regarding preferences, determining the extent to which they care about the welfare of others. The prevalence and implications of these types of preferences are considered in both market and non–market settings. This thesis is dedicated to my daughter, Isabella.

2 citations

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

  • ...This work, building on the social psychology work of Tajfel et al. (1971) and Tajfel & Turner (1986), was pioneered in economics by Charness et al. (2007) and Chen & Li (2009)....

    [...]

Management Impact in an Experimental Intergroup Contest

[...]

Gerald Eisenkopf1•
University of Konstanz1
01 Jan 2013
TL;DR: In this paper, the authors present experimental evidence on the impact of managers and their incentives on the behavior of group members in intergroup contests and find that members follow the nonbinding investment recommendations of their group manager in particular if the managers payoff does not depend on the members behavior.
Abstract: The paper presents experimental evidence on the impact of managers and their incentives on the behavior of group members in intergroup contests. I find that members follow the nonbinding investment recommendations of their group manager in particular if the managers payoff does not depend on the members behavior. Different incentives schemes induce the managers to lead the groups into different directions but incentivized managers are less capable of inducing very high or low contest investments.

2 citations

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

  • ...In line with this argument the utility function of the group member 1 changes as follows: 1000 1 1000 (3) The variable captures the in-group effect (Charness et al., 2007; Chen and Li, 2009; Chen and Chen, 2011)....

    [...]

Journal Article•DOI•
When the cat's (far) away... the effect of control centralization and compensation interdependence on performance misreporting

[...]

Jeremy B. Lill1•
University of Kansas1
15 Apr 2015-Social Science Research Network
TL;DR: In this article, the authors examine whether implementing a more centralized versus decentralized monitoring control influences employees' perceptions of whether the control will detect misreported performance and find that when compensation interdependence is high, the effect of control centralization on dishonest reporting is muted.
Abstract: This study investigates how control features influence employees’ perceptions of controls and, subsequently, their reporting behaviors. Specifically, I examine whether implementing a more centralized versus decentralized monitoring control influences employees’ perceptions of whether the control will detect misreported performance. In an experiment that holds the true detection rate constant, I find participants perceive a relatively decentralized control more likely to detect misreporting than a centralized control. Because decisions about monitoring controls and compensation systems are interrelated (O’Donnell 2000) and made contemporaneously (Brenner and Ambos 2013), I also examine whether compensation interdependence influences the effect that control centralization has on misreporting. Prior research documents aggressive reporting behavior increases as compensation becomes more interdependent (Sutter 2009). This suggests that larger increases in perceived detection rates are required to reduce dishonest reporting as compensation interdependency increases. Therefore, for a given level of perceived detection resulting from control centralization, employees are more likely to misreport when compensation is more interdependent than independent. Consistent with this reasoning, I find that a more decentralized control reduces dishonest reporting when compensation interdependence is low. However, when compensation interdependence is high, the effect of control centralization on dishonest reporting is muted. These results suggest that a complex relationship exists between control centralization and compensation interdependence. As such, this study has important implications for academics, control system designers, and compensation system designers.

2 citations

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

  • ...Prior literature suggests that group membership can lead to aggressive, risky decision making (Charness et al. 2007; Luhan et al. 2009; Yechiam et al. 2008).5 Related literature also finds that individuals lie more when they share the benefit of the lie with another person than when there is no…...

    [...]

  • ...2 Compensation Interdependence and Misreporting Prior literature suggests that group membership can lead to aggressive, risky decision making (Charness et al. 2007; Luhan et al. 2009; Yechiam et al. 2008).5 Related literature also finds that individuals lie more when they share the benefit of the lie with another person than when there is no mutual benefit (Erat and Gneezy 2012; Gneezy 2005). Taken together, this literature suggests that high compensation interdependence will have an adverse effect on reporting behavior. Two recent accounting studies have leveraged these findings to predict a positive main effect for compensation interdependence on misreporting. Church et al. (2012) show that managers create more budgetary slack when they share the benefits of slack with a subordinate than when they alone receive the benefits. Maas and Van Rinsum (2013) show that more dishonest reporting occurs when misreported performance positively influences peers’ compensation than when it negatively influences peers’ compensation....

    [...]

  • ...2 Compensation Interdependence and Misreporting Prior literature suggests that group membership can lead to aggressive, risky decision making (Charness et al. 2007; Luhan et al. 2009; Yechiam et al. 2008)....

    [...]

  • ...2 Compensation Interdependence and Misreporting Prior literature suggests that group membership can lead to aggressive, risky decision making (Charness et al. 2007; Luhan et al. 2009; Yechiam et al. 2008).5 Related literature also finds that individuals lie more when they share the benefit of the lie with another person than when there is no mutual benefit (Erat and Gneezy 2012; Gneezy 2005). Taken together, this literature suggests that high compensation interdependence will have an adverse effect on reporting behavior. Two recent accounting studies have leveraged these findings to predict a positive main effect for compensation interdependence on misreporting. Church et al. (2012) show that managers create more budgetary slack when they share the benefits of slack with a subordinate than when they alone receive the benefits....

    [...]

Journal Article•DOI•
Increased risk-taking, not loss tolerance, drives adolescents’ propensity to choose risky prospects more often under peer observation

[...]

Agnieszka Tymula1, Xueting Wang1•
University of Sydney1
01 Aug 2021-Journal of Economic Behavior and Organization
TL;DR: This paper found that while observed by peers, 18-24-year-old adolescents became more risk-tolerant both in gains and in losses but more loss averse than younger adolescents.
Abstract: Relative to adults, adolescents make more welfare-decreasing decisions, especially in the presence of peers. The consequences of these decisions result in substantial individual and societal losses in terms of lives lost, injury, hospitalization costs, and foregone opportunities. In this paper, we use laboratory within-subject and between-subject experiments with younger (12–17 years old) and older (18–24 years old) adolescents to identify which economic preference is affected by peer observation in adolescence — risk tolerance in gains, risk tolerance in losses, and/or loss aversion. We find that in our study, while observed by peers, 18–24-year-old adolescents became more risk-tolerant both in gains and in losses but more loss averse. We discuss the potential mechanisms driving the result and its policy implications.

2 citations

Rhizomatic Thinking and Voting Equilibria in Large Multi-Candidate Elections under Plurality Rule ∗

[...]

João Bravo-Furtado1, Paulo P. Côrte-Real1•
Universidade Nova de Lisboa1
01 Jan 2009
TL;DR: In this paper, the authors consider a model of strategic voting behavior in large multi-candidate elections under plurality rule where they allow for the possibility of rhizomatic thinking (Bravo-Furtado & Corte-Real [4]).
Abstract: We consider a model of strategic voting behavior in large multi-candidate elections under Plurality Rule where we allow for the possibility of rhizomatic thinking (Bravo-Furtado & Corte-Real [4]). Our rhizomatic assumption states that each agent may, to various degrees, condition her optimal response on an exogenous belief she possesses over the proportion of like-minded others that will take the same action as she does. In our pivotal-agent game, we therefore relax self-goal choice - and rhizomatic beliefs will induce agents to perceive that they may be pivotal with a non-vanishing probability. We modify the trinomial pivotal-voter model of Palfrey [21] and solve for asymptotic equilibria using appropriate techniques provided by large deviations theory, given the distributions of preferences and beliefs. We show existence and possible uniqueness of equilibria in this setting. We then conclude that our model may help select equilibria, adding predictive power to standard game-theoretic settings. We also find that Duverger’s Law may be violated in equilibrium and, as an application, we suggest rhizomatic thinking can help provide a compelling rationale for the non-Duvergerian outcome of 1992 US presidential election. Correlations between rhizomatic beliefs and preferences explain the different equilibrium outcomes and our model therefore calls attention to the role of partisanship and group identity in plurality election outcomes.

2 citations

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

  • ...In a recent paper, Charness, Rigotti and Rustichini [6], claim that "When society is organized in groups, social psychology, sociology, and anthropology hold the view that human behavior is better understood as social behavior....

    [...]

  • ...[6] conclude, in an experimental setting, that the perception of group salience and group membership in‡uence strategic behavior in Matching-Pennies and prisoner’s dilemmas games....

    [...]

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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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.