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The anatomy of distributional preferences with group identity

Daniel Muller

Working Papers from Faculty of Economics and Statistics, University of Innsbruck

Abstract: This paper dissects distributional preferences with group identity 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 put on average less weight on income of the out-group, but overall only a minority behaves completely selfishly. Giving to the out-group also renders subjects more accepting of inequality. However, the experiment also uncovers a large heterogeneity of preferences. Those who are social become less social in the presence of the out-group. The number of selfish individuals is instead hardly affected. Moreover, an analysis of GARP violations reveals that choices in both treatments overwhelmingly stem from well-behaved, yet systematically different underlying social preference functionals. Hence this experiment suggests that the rational choice approach, which is predominantly used in the literature, is a useful tool to understand the effect of group identity on social preferences. Additionally, I find that the weight on self, but not the individual equity- efficiency trade-off, predicts political left-right self-assessment as more conservative voters are more selfish. I also document gender differences: females put less weight on self, are more inequality averse and display a larger in-group - out-group bias.

Keywords: Social identity; GARP; distributional preferences; inequality (search for similar items in EconPapers)
JEL-codes: D30 D63 H50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp, nep-neu and nep-upt
Date: 2017-01, Revised 2017-03
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