Toward an Economic Theory of Dysfunctional Identity

49 Pages Posted: 20 Oct 2004

See all articles by Hanming Fang

Hanming Fang

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Glenn C. Loury

Boston University - Department of Economics

Date Written: October 2004

Abstract

We advance a novel choice-theoretic model of identity based on the notions of categories and narratives. Identity is conceived as a matter of "reflexive perception" - how people understand themselves. Choosing an identity is equivalent to making a generalization about one's past that highlights the most salient aspects of experience. When many individuals make a common choice in this regard, they embrace a collective identity which is dysfunctional if it is Pareto dominated by an alternative self-classificatory schema. Using a simple multi-stage risk sharing game, we explore conditions under which dysfunctional collective identities might be expected to emerge.

Keywords: Identity; Dysfunctional Collective Identity

JEL Classification: Z1, Z13

Suggested Citation

Fang, Hanming and Loury, Glenn C., Toward an Economic Theory of Dysfunctional Identity (October 2004). Cowles Foundation Discussion Paper No. 1483, Available at SSRN: https://ssrn.com/abstract=607901

Hanming Fang (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Glenn C. Loury

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States