Identity, Dignity and Taboos: Beliefs as Assets

Roland Benabou () and Jean Tirole

No 6123, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze social and economic phenomena involving beliefs which people value and invest in, for affective or functional reasons. Individuals are at times uncertain about their own 'deep values' and infer them from their past choices, which then come to define 'who they are'. Identity investments increase when information is scarce or when a greater endowment of some asset (wealth, career, family, culture) raises the stakes on viewing it as valuable (escalating commitments). Taboos against transactions or the mere contemplation of tradeoffs arise to protect fragile beliefs about the 'priceless' value of certain assets (life, freedom, love, faith) or things one 'would never do'. Whether such behaviours are welfare-enhancing or reducing depends on whether beliefs are sought for a functional value (sense of direction, self-discipline) or for 'mental consumption' motives (self-esteem, anticipatory feelings). Escalating commitments can thus lead to a 'hedonic treadmill', and competing identities cause dysfunctional failures to invest in high-return activities (education, adapting to globalization, assimilation), or even the destruction of productive assets. In social interactions, norm violations elicit a forceful response (exclusion, harassment) when they threaten a strongly held identity, but further erode morale when it was initially weak. Concerns for pride, dignity or wishful thinking lead to the inefficient breakdown of Coasian bargaining even under symmetric information, as partners seek to self-enhance and shift blame by turning down 'insultingly low' offers.

Keywords: anticipatory utility; bargaining; hedonic treadmill; identity; memory; religion; self-control; self-image; self-serving beliefs; taboos; wishful thinking (search for similar items in EconPapers)
JEL-codes: D81 D91 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv, nep-soc and nep-upt
Date: 2007-02
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Related works:
Working Paper: Identity, Dignity and Taboos: Beliefs as Assets (2007)
Working Paper: Identity, Dignity and Taboos: Beliefs as Assets (2007)
Working Paper: Identity, Dignity and Taboos: Beliefs as Assets (2006)
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