The anatomy of distributional preferences with group identity
Working Papers from Faculty of Economics and Statistics, University of Innsbruck
The increasing diversity of societies raises questions about the consequences for redistributive preferences. This paper assesses the impact of social identity on distributional preferences in a modified dictator game. I estimate individual-level utility functions with two parameters that govern the trade-offs between equity and efficiency and giving to self and to other. Subjects on average put less weight on income of the out-group. The out-group treatment also changes the distribution of equity-efficiency concerns. However, the experiment also uncovers a large individual heterogeneity of preferences. An analysis of GARP violations reveals that choices in both treatments overwhelmingly stem from well-behaved, yet systematically different underlying utility functions. Hence, the evidence presented here suggests that the rational choice approach is a useful tool for understanding the effect of social identity on preferences.
Keywords: Social identity; inequality; distributional preferences; GARP; rationality; in-groupÐoutgroup bias (search for similar items in EconPapers)
JEL-codes: D30 H30 H80 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2017-01, Revised 2017-03
New Economics Papers: this item is included in nep-exp, nep-neu and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2017-02
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