‘Us’ and ‘Them’: the origin of identity, and its economic implications

‘Us’ and ‘Them’: the origin of identity, and its economic implications

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Article ID: iaor201111981
Volume: 44
Issue: 3
Start Page Number: 719
End Page Number: 748
Publication Date: Aug 2011
Journal: Canadian Journal of Economics/Revue canadienne d'conomique
Authors: , ,
Keywords: behaviour
Abstract:

We investigate the origins of identity and the innate proclivity to draw a distinction between ‘insiders’ and ‘outsiders’. We propose an evolutionary explanation: we argue that identity arises because it facilitates survival. In an evolutionary setting we endogenize preferences and demonstrate that the evolutionarily stable preferences fashioned by natural selection would distinguish between insiders and outsiders. We then work out the implications of such preferences in two contemporary scenarios, one entailing rent‐seeking behaviour and the other involving public good provision. Our results are in conformity with empirical evidence.

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