Effects of Manipulating Individual Identity

Effects of Manipulating Individual Identity ariseThis study bear witnessd how ever-changing the acquaintance of tender blank space changed the right smart in which subjects interacted in the bank Game specific eithery looking into the neighborly sense of tastes they dis take to the woodsed. A password of both scotchal and sociological research demonstrates the inherent variance of loving individualisticism and tender exceed and the inter affiliated disposition these sen clock ti ments fork up with aff adapted preferences. A twain-stage experiment involving subjects of contrary subject araities and sexual urges was carried out with a different individuality emphasis in for for each ane iodine stage. Findings make that subjects exhibit majusculeer accessible preferences when interacting with those of a similar focussed individualism yet the degrees of these preferences dis vivifyed transmute in compliance to the individualism operator focus. Res ults suggest that societal withdrawnness, although easily compositionipulated, is a powerful pull out in interactions. The results be undifferentiated with previous studies into assemblage rank, indistinguishability operator, nationality, sexual activity and accessible preferences. Given this studys ut just about-reaching significations it should be viewed as the premise for approaching study of this topic. triggerThe concept of companion qualified distance as elucidated by Akerlof (1997) is pro set uply connect with mixer individuality operator and bosomy preferences. It is the differences in individuals mixer identities, including for example, charge, sexuality, class and status, that gibe the bene play offs of interaction and to what tip of societal preferences atomic number 18 dis compete. and when individuals ar non scarcely familiar with each other(a), the percept of companionable identities is based on rattling few contemplations and i s therefore non entirely accurate. The character of this discourse is to examine whether or non variations in the comprehension of genial individualism, and thereof kind distance, ordain run the extent to which fond preferences be manifested.Studies on the load of indistinguishability atomic number 18 in no direction new. Akerlof and Kranton (2000) advisevass its relevancy and magnitude with debates to sexuality discrimination in the workplace, p everywherety and friendly exclusion, and the household division of labour. Akerlof (1997) in like manner studied the ready of neighborly distance, take a firm stand that the mixer identity of individuals croupe substanti all(prenominal)y change their interactions. What has non been sampleed, however, is to what extent identity is unless a perception. Individuals wad and do possess multiplex identities switching in dominance from federal agency to place. The meditation of this physical composition is t hat affable preferences be relevant in experimental impales, unsulliedly these argon dependent on how each actor beholds the others complaisant identity, a perception that is inherently variable. Players pit with varying degrees of self-importance-interest match to the identity they discriminate, even when very(a) character profiles be involved. Recent frugalal studies bomb to sufficiently turn back current sociological thinking as to the nature of sociable identity and although this study in cuss give evidence for the relevance of tender distance in as genuine degrees of sociable preferences, it pull up stakes exertion to shed prosperous on individuals in consonant perception of the distance amongst them.In couch to add weight to this position, an experiment was organised in which fictitious charactericipants of divers(a) profiles were invited to play the self-assurance Game. Each pole was play face to face with no verbal communication. The experimen t was change integrityd into two stages, a nationality centre stage and a gender foc utilize stage. Each participant played the game double and never with the same opposing player. Before each game, participants were assigned to veritable rooms in which video clips were played depending on the identity center on. In the first-year stage, participants were split into three rooms, unitaryness for each nationality sacrifice Scottish, English and Chinese. After virtuoso play of the practice Game, the experiment commenced its twinkling stage and participants were split into two rooms, one for each gender, and a procure asked to play the game.The results delegate that there is signifi nett variation in the degrees of companionable preferences give awayed depending on the identity be focused on after liveliness referred to as the focused identity. When nationality was the focused identity, those with this vulgar identity exhibited greater brotherly preferences than those o f differing nationalities, regardless of gender. When gender was the focused identity, those with this jet identity exhibited greater kind preferences than those of differing gender, regardless, to well-nigh extent, of nationality. This pretermit of consistency portrays that the perception of social distance is non a continual with both stages and yet it is still grows to be a determining factor in how players interact.The fol slumping content of this paper is arranged into quadruplet departments. slit 2 depart address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, hash outing the exertion of divers(a) theories in the condition of this study. Section 3 bequeath specify the design and instruction execution of the experiment used in this study with the results, outline and comparisons to similar studies perplexed in Section 4. An interpretation of these results an d discharge ground final stages will be tornadoed in Section 5.Theories of Preferences and IdentityTo intelligibly d admitstairsstand the argument presented, a holistic discussion of current theories must(prenominal) be embarked upon. The relevance of social preferences and the excogitates of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will wherefore be considered before discussing their coincidenceship with social preferences.Social PreferencesThe presumption that man is actuate by self-interest is one that has dominated economic theory and is and so fundamental to the very ideology of the vast major(ip)ity of economists. As decade Smith (191013) suggests, It is not from the benevolence of the simplycher, the brewer, or the baker, that we bide our dinner, nevertheless from their regard to their own interest. In herent in this analogy is the implication that self-interest is the unproblematic motivator in our economic interactions, and it is through this nerve impulse that equilibria be framinged. In Game Theory, the Nash Equilibrium is obtained by each player assumptive the other possesses strictly selfish motives. This assumption, however, is not al appearances consistent with verity. Many factors diverge an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions bed relate to social status, pigeonholing membership, inequity annoyance, reciprocality, spite, envy, self-sacrifice and identity. These factors form a preference put up, referred to in this study as social preferences.Although the theory of self-interest has been ingrained in tralatitious economics, in advance(p) economists extradite increasingly questioned this supposition. In fact the trad itional authors of this theory were as well as wary of its realism. Even though Edgeworth (188116) writes that the first teaching of Economics is that all(prenominal) agent is actuated exclusively by self-interest, he concedes that Man is, in reality, for the most part an impure selfist, a manifold utilitarian, (Edgeworth 1881104). It is evident that we are entranced by unselfish motives in our interactions with others and it follows that these interactions will in many great deal involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977336), in his creative paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to cosmos a social moron. He argues that theories that do not encompass the deflect of sympathy and our load to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no familiarity would be executable (Johansen 1977).In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, inequity wickedness, altruism and believe are all basic components of this preference set (Andreoni et al. 2002). When sympatheticness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to arise against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. think is the federal agency in the approaching actions of another(prenominal) and is arguably the most variable of the social preferences and one that will be revisited in this study.Each of these attri providedes are faraway from abstract philosophical concepts, exert great make up ones mind on our economic interactions. Agell and Lundberg (1995) discoered that as a result of workers existence defined by lividity and equity customs, remuneration cuts were ofte n unprofitable, with workers objecting to an unfair action. This can pay a direct contact on the extent that a company vertically integrates, with out-sourcing often being far much(prenominal) than viable effrontery the interactional attitude of workers. Bewley (1999) withal noted that a firms policy can make a motion worker esprit de corps and as much(prenominal) companies must take into musical score the sensed loveliness of their policies. The extent of tax evasion has similarly been correspond to how fair it is savvyd, and in fact the entire structure of tax systems are thoroughly debated and alter according to the principles of equity and merit (Seidl and Traub 2002). The perception of unrequited generosity has been one of the causes of the general decrement in support from the US welfare state. hoi polloi are disinclined to support welfare structures that give the impression that they are easeing a poor segment of ships company that defy to help themselv es, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) in any case correlates economic successfulness with higher levels of assert, suggesting that social preferences are a very powerful deplume play even in the current global economic system.Sequential gamesAlthough the examples habituated are wide-ranging in scope, involving relatively bad economic issues, social preferences have as well been proven to have a significant set up on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by presume that all agents were all self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game.There are tw o players in the game, one a removal firm and one a respondent. The suggester must divide an come in of property X amongst the two players, adviseing the respondent any gist Y = X. If Responder selects, the Proposer receives the remaining money X Y, if they balk, both receive nothing. Under self-interested preferences, the cost-efficient equilibrium is the one in which the Proposer gives the to the lowest degree cadence practical to the Responder, who will concur any essence. In reality however, offers of less than a fifth of X are rejected or so half time and Proposers anticipating this generally offer around 30 to 50 part of X (Hoffman et al. 1996). This result undecidedly shows that factors other than self-interest are at play. It would be reasonable to hook on that altruism and reciprocity both play a part in the decision- do process of both players. The Proposer whitethorn be submitd by a code of morals and a concept of loveliness to offer more than than the standard equilibrium distribution. The Proposer must to a fault take into key out the Responders genius of reciprocity and animosity towards a apparently unfair distribution. Although the Responder is under no monetary inducement to reject a low offer, yet his social preferences mean that he is able to achieve several(prenominal) utility by spiting the Proposer, thereby valuing a definite come up of reciprocity over monetary value.Given the fact that the Proposers actions may be dictated only when by the idolatry of reciprocity and no sense of altruism, it is worthy to look into the potentates Game first introduced by Kahneman et al. (1986) and nice by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the prevention given by the Proposer. If the Proposer is do by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the ca se. Henrich et al. (2001) find that in most potentate game experiments there is a primary temper offer of zero percent of the Proposers kernel wealth and a secondary stylus offer of 50 percent. Some multitudes show a primary mode offer of 20 percent and a secondary mode of 50 percent providing fast(a) evidence of inequity aversion. In addition to financial support the whimsy that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present in the Ultimatum Game and that Proposers apply backwards inductance with average offers being lower in the Dictator Game (Roth et al. 1991).The faith Game, developed by berg et al. (1995) is a game that can be used to test the mien of altruism, inequity aversion, reciprocity and its namesake, in sureness. The game is played with an Investor and a regent, with the fountain being given an sign endowment of X and the latter given nothing. The Investor is then able to give any amount Y amidst 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z amongst 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X Y + Z and 3Y Z respectively. The Trustee is under no monetary incentive to return any amount and as such(prenominal)(prenominal), under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictator Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that virtually all Investors give some amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given indeed backing the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to dis play inequity aversion by choosing to give or return amounts that will equalise last payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is fire to note that there is substantial variation in the amounts given, with no earn average amount entrusted. The variation is not unsurprising, however, given the inherent contrariety in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceive identity of the individual in question.IdentityIdentity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the reflection of these two concepts that decisions are made. Descartes (1912167) famously stated I think, therefore I am, and in doing so sparked off the philosophical debate on what in truth directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his printing that we can only perceive ourselves, and build our identity, by categorisation in the get out of selected characteristics and never perceive our true reality in quarry terms. It is out-with the bounds of this study to discuss in prudence the sociological and psychological complexities of this topic, yet it is worth-while bringing to unwarranted some hear concepts to further the understanding of the interactions mingled with this studys participants.An identity is a slam of recognition. It allows us to recognise individuals, categories, themes and types of individuals, Wiley (1994130). More than this, it is also a tool of categorisation and ablaze cues. It implies a conscious awareness by members of a group, some confirmative or oppose e motional public opinions towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections the ain identity, the ego identity and the social identity. The in-person identity is the unique identification that each individual possesses to differentiate themselves technically, licitly and realistically from all others. The ego identity is a purely native observation that is built from a multitude of social survives and is a sense of ones own particular state and nature. The social identity provides a way of categorising mint and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be gr ouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and policy-making views. It is master(prenominal) to straining that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation.Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant enchant on our decisions and actions. Their theorem sheds light on a number of patently irrational choices. Actions that are of obvious detriment to an individual can be viewed as a form of doings that it used to create a more unique self identity. Similarly, steps may be taken to intend the assumption of a particular identity or the membership of a accredited group, be they conscious or otherwise. Men do not generally pause dresses, and as such this behavioural code is unconsciously subscribed to by the volume of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of humans itself. Attempts to manipulate an individuals decisions can be based on the feeling of identity. In inn to influence people to buy their products, companies create advertisements that often show a stylise form of a particular identity that people may plan to. Finally, as identity can play such a astronomical role in determining our economic decisions and behaviour, and expect that individuals can postulate their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a polish strengthened by the theory of role-identities.It is difficult to notice to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are late interconnected. Lyman and Scott (1970136) brighten this link by sta ting that roles are identities mobilised in a specific situation whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also confiscate a role. Despite that the fact that this role varies from situation to situation, it is at all time consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced by considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive compulsory feedback or avoid negative feedback. In order to assess these expectations and act accordingly, we must first settle what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-spe cified contours of their social roles, (McCall and Simmons, 197870). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an accusive character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing social distance.Identities and Social PreferencesAkerlof (1997) specify social distance as a measure of social propinquity between individuals. The model he created summarises that people gain benefits from interacting to those socially impending to themselves, with these benefits decreasing with isolation. This model is supported by experimental evidence that suggests that trust and reciprocity are linked with social connecter and t hat members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method acting of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results.Studying the do of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. finished using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is th at subjects react to membership in a very infixed manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most marginal connections within a group still give rise to in-group incontrovertible discrimination. Although subjects realised that the tail of group composition was entirely random, they still discriminated toward their young buck members in a very significant way. The fact that the weakest bonds are able to create ordained in-group interaction is an important consideration when examining the relation between perceptions of social identity and expressions of social preferences.While group membership is a powerful force, international studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more believe when paired with in-group members but that this is not the case for subjects from China and Japan, who are mo re trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations crossways genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and give-and-take levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingly irrelevant conversations significantly increased the levels of these social preferences. disregardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict ho w they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these corrupted images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. victorious into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept nearly linked with trust.The concept of trust, as mentioned earlier is based on boldness and at the flavor of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, a lthough proven in studies referred to above, is readily seen in everyday life. Trust can be noncontroversial with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is stark and cannot be trusted. It is perceived as the expression of an identity, the perception of which can influence our attitudes and behaviour.The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however negligible, show the great influence groups have on these social preferences. One bil l of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their love seat expects them to be. Akerlofs (19971008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The conformist Model. A reduction of social distance between players can also be achieved by perceived acts of graciousness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities.Two significant ways in which individuals target themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal rail-splitter of the human race, antecede all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the contrary sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and claim structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both family life and work life. Lockheed (1985) supposes that women are conc eived as compliant followers and men predominant leaders only because of the common minority and majority balance that is common in social and work situations. The vast disparity between the social identity and genuine realities of members of the opposite sex provides a good chance to explore to what extent interaction is based on unqualified perceptions and to procedure the effect of variations in this perception.Unlike gender identities, patriotism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse nations such as India and Russia, but divided others as seen in the cases of North and in the south Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards sonny nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964378) notes that governments utilise nationalistic instruments for the purpose of inc reasing the allocate of assets in a given assets in a given soil owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of enthronization and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The implement of promoting these nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups do.The membership of these nation-groups is defined according to several commonalities. Members grapple an economy, a historic territory, myths and memories, a public culture, and a set of sound rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary conside rably in their social and personal identities. The minimal nature of the nation-group is pass judgment by many academics, some seeing nationalism as an juiceless tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (19693) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through th e stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed. observational Design and executionIt is social identity and its inherently variable lumber that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences manifested. Given its ability to expose these preferences, an extension of the Trust Game is usedEffects of Manipulating Individual IdentityEffects of Manipulating Individual IdentityAbstractThis study examined how changing the perception of social distance changed the way in which subjects interacted in the Trust Game specifically looking into the s ocial preferences they displayed. A discussion of both economic and sociological research demonstrates the inherent variability of social identity and social distance and the interconnected nature these concepts have with social preferences. A two-stage experiment involving subjects of different nationalities and genders was carried out with a different identity focus in each stage. Findings show that subjects exhibit greater social preferences when interacting with those of a similar focused identity yet the degrees of these preferences displayed vary in accordance to the identity focus. Results suggest that social distance, although easily manipulated, is a powerful force in interactions. The results are consistent with previous studies into group membership, identity, nationality, gender and social preferences. Given this studys far-reaching implications it should be viewed as the premise for future study of this topic.IntroductionThe concept of social distance as elucidated by A kerlof (1997) is profoundly linked with social identity and social preferences. It is the differences in individuals social identities, including for example, race, gender, class and status, that determine the benefits of interaction and to what extent of social preferences are displayed. Yet when individuals are not entirely familiar with each other, the perception of social identities is based on very few observations and is therefore not entirely accurate. The purpose of this dissertation is to examine whether or not variations in the perception of social identity, and thus social distance, will affect the extent to which social preferences are manifested.Studies on the effect of identity are in no way new. Akerlof and Kranton (2000) studied its relevance and magnitude with regards to gender discrimination in the workplace, poverty and social exclusion, and the household division of labour. Akerlof (1997) also studied the effect of social distance, asserting that the social ident ity of individuals can substantially affect their interactions. What has not been tested, however, is to what extent identity is merely a perception. Individuals can and do possess multiple identities varying in dominance from situation to situation. The hypothesis of this paper is that social preferences are relevant in experimental games, but these are dependent on how each player perceives the others social identity, a perception that is inherently variable. Players react with varying degrees of self-interest according to the identity they perceive, even when identical character profiles are involved. Recent economic studies fail to sufficiently incorporate current sociological thinking as to the nature of social identity and although this study will give evidence for the relevance of social distance in determining degrees of social preferences, it will attempt to shed light on individuals inconsistent perception of the distance between them.In order to add weight to this positio n, an experiment was organised in which participants of various profiles were invited to play the Trust Game. Each game was played face-to-face with no verbal communication. The experiment was divided into two stages, a nationality focused stage and a gender focused stage. Each participant played the game twice and never with the same opposing player. Before each game, participants were assigned to certain rooms in which video clips were played depending on the identity focused on. In the first stage, participants were split into three rooms, one for each nationality present Scottish, English and Chinese. After one play of the Trust Game, the experiment commenced its second stage and participants were split into two rooms, one for each gender, and again asked to play the game.The results show that there is significant variation in the degrees of social preferences displayed depending on the identity being focused on hereafter referred to as the focused identity. When nationality was the focused identity, those with this common identity exhibited greater social preferences than those of differing nationalities, regardless of gender. When gender was the focused identity, those with this common identity exhibited greater social preferences than those of differing gender, regardless, to some extent, of nationality. This lack of consistency shows that the perception of social distance is not a constant through both stages and yet it is still proves to be a determining factor in how players interact.The following content of this paper is arranged into four sections. Section 2 will address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, discussing the application of various theories in the context of this study. Section 3 will describe the design and implementation of the experiment used in this study with the results, analysis and comparisons to similar studies presente d in Section 4. An interpretation of these results and further conclusions will be offered in Section 5.Theories of Preferences and IdentityTo clearly understand the argument presented, a holistic discussion of current theories must be embarked upon. The relevance of social preferences and the forms of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will then be considered before discussing their relationship with social preferences.Social PreferencesThe assumption that man is motivated by self-interest is one that has dominated economic theory and is indeed fundamental to the very ideology of the vast majority of economists. As Adam Smith (191013) suggests, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Inherent in this analogy is the implication that self-interest is the primary motivator in our economic interactions, and it is through this impulse that equilibria are formed. In Game Theory, the Nash Equilibrium is obtained by each player assuming the other possesses purely selfish motives. This assumption, however, is not always consistent with reality. Many factors influence an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions can relate to social status, group membership, inequity aversion, reciprocity, spite, envy, altruism and identity. These factors form a preference set, referred to in this study as social preferences.Although the theory of self-interest has been ingrained in traditional economics, modern economists have increasingly questioned this supposition. In fact the traditional authors of this theory were also wary of its realism. Even though Edgeworth (188116) writes that t he first principle of Economics is that every agent is actuated only by self-interest, he concedes that Man is, in reality, for the most part an impure egoist, a mixed utilitarian, (Edgeworth 1881104). It is evident that we are influenced by unselfish motives in our interactions with others and it follows that these interactions will in many circumstances involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977336), in his seminal paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to being a social moron. He argues that theories that do not encompass the influence of sympathy and our commitment to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no society would be feasible (Johansen 1977).In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, i nequity aversion, altruism and trust are all basic components of this preference set (Andreoni et al. 2002). When kindness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to rebel against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. Trust is the confidence in the future actions of another and is arguably the most variable of the social preferences and one that will be revisited in this study.Each of these attributes are far from abstract philosophical concepts, exert great influence on our economic interactions. Agell and Lundberg (1995) discovered that as a result of workers being influenced by fairness and equity customs, wage cuts were often unprofitable, with workers objecting to an unfair action. This can have a direct impact on the extent that a company vertically integrates, with out-sourcing often being far more viable given the reciprocal attit ude of workers. Bewley (1999) also noted that a firms policy can affect worker morale and as such companies must take into account the perceived fairness of their policies. The extent of tax evasion has also been correlated to how fair it is perceived, and in fact the entire structure of tax systems are thoroughly debated and altered according to the principles of equity and merit (Seidl and Traub 2002). The perception of unreciprocated generosity has been one of the causes of the general reduction in support from the US welfare state. People are disinclined to support welfare structures that give the impression that they are helping a poor segment of society that refuse to help themselves, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) also correlates economic prosperity with higher levels of trust, suggesting that social preferences are a very powerful force even in the current global economic system.Sequential gamesAlthough the examples given are wide-ranging in scope, involving relatively large economic issues, social preferences have also been proven to have a significant effect on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by assuming that all agents were exclusively self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game.There are two players in the game, one a Proposer and one a Responder. The Proposer must divide an amount of money X between the two players, offering the Responder any amount Y = X. If Responder accepts, the Proposer receives the remaining money X Y, if they reject, both receive nothing. Under self-interested preferences, the efficient equilibrium is the one in which the Proposer gives the least amount possible to the Responder, who will accept any amount. In reality however, offers of less than a fifth of X are rejected about half time and Proposers anticipating this generally offer around 30 to 50 percent of X (Hoffman et al. 1996). This result clearly shows that factors other than self-interest are at play. It would be reasonable to assume that altruism and reciprocity both play a part in the decision-making process of both players. The Proposer may be influenced by a code of morals and a concept of fairness to offer more than the standard equilibrium distribution. The Proposer must also take into account the Responders sense of reciprocity and animosity towards a seemingly unfair distribution. Although the Responder is under no monetary incentive to reject a low offer, yet his social preferences mean that he is able to achieve some utility by spiting the Proposer, thereby valuing a certain amount of reciproci ty over monetary value.Given the fact that the Proposers actions may be driven only by the fear of reciprocity and no sense of altruism, it is worthwhile to look into the Dictators Game first introduced by Kahneman et al. (1986) and refined by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the amount given by the Proposer. If the Proposer is motivated by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the case. Henrich et al. (2001) find that in most dictator game experiments there is a primary mode offer of zero percent of the Proposers total wealth and a secondary mode offer of 50 percent. Some groups show a primary mode offer of 20 percent and a secondary mode of 50 percent providing strong evidence of inequity aversion. In addition to supporting the notion that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present in the Ultimatum Game and that Proposers apply backwards induction with average offers being lower in the Dictator Game (Roth et al. 1991).The Trust Game, developed by Berg et al. (1995) is a game that can be used to test the presence of altruism, inequity aversion, reciprocity and its namesake, trust. The game is played with an Investor and a Trustee, with the former being given an initial endowment of X and the latter given nothing. The Investor is then able to give any amount Y between 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z between 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X Y + Z and 3Y Z respectively. The Trustee is under no monetary incentive to return any amount and as such, under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictat or Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that almost all Investors give some amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given thus supporting the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to display inequity aversion by choosing to give or return amounts that will equalise final payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is interesting to note that there is substantial variation in the amounts given, with no clear average amount entrusted. The variation is not unsurprising, however, given the inherent inconsistency in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceived identity of the individual in question.IdentityIdentity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the consideration of these two concepts that decisions are made. Descartes (1912167) famously stated I think, therefore I am, and in doing so sparked off the philosophical debate on what truly directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his belief that we can only perceive ourselves, and build our identity, by categorisation in the light of selected characteristics and never perceive our true reality in objective terms. It is out-with the bounds of this study to discuss in depth the sociological and psy chological complexities of this topic, yet it is worth-while bringing to light some key concepts to further the understanding of the interactions between this studys participants.An identity is a tool of recognition. It allows us to recognise individuals, categories, groups and types of individuals, Wiley (1994130). More than this, it is also a tool of categorisation and emotional cues. It implies a conscious awareness by members of a group, some positive or negative emotional feelings towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections the personal identity, the ego identity and the social identity. The personal identity is the unique identification that each individual possesses to differentiate themselves technically, legally and realistically from all others. The eg o identity is a purely subjective observation that is built from a multitude of social experiences and is a sense of ones own particular state and nature. The social identity provides a way of categorising people and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be grouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and political views. It is important to stress that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation.Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant influence on our decisions and actions. Their theorem shed s light on a number of seemingly irrational choices. Actions that are of apparent detriment to an individual can be viewed as a form of behaviour that it used to create a more unique self identity. Similarly, steps may be taken to symbolise the assumption of a particular identity or the membership of a certain group, be they conscious or otherwise. Men do not generally wear dresses, and as such this behavioural code is unconsciously subscribed to by the majority of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of manhood itself. Attempts to manipulate an individuals decisions can be based on the notion of identity. In order to influence people to buy their products, companies create advertisements that often show a stylised form of a particular identity that people may aspire to. Finally, as identity can play such a large role in determining our economic decisions and behaviour, and assuming that individuals can choose their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a conclusion strengthened by the theory of role-identities.It is difficult to determine to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are deeply interconnected. Lyman and Scott (1970136) clarify this link by stating that roles are identities mobilised in a specific situation whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also assume a role. Despite that the fact that this role varies from situation to situation, it is at all times consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced b y considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive positive feedback or avoid negative feedback. In order to assess these expectations and act accordingly, we must first judge what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-specified contours of their social roles, (McCall and Simmons, 197870). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an objective character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing soc ial distance.Identities and Social PreferencesAkerlof (1997) defined social distance as a measure of social proximity between individuals. The model he created summarises that people gain benefits from interacting to those socially closer to themselves, with these benefits decreasing with isolation. This model is supported by empirical evidence that suggests that trust and reciprocity are linked with social connection and that members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results.Studying the effects of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. Through using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is that subjects react to membership in a very subjective manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most minimal connections within a group still give rise to in-group positive discrimination. Although subjects realised that the basis of group composition was entirely random, they still discriminated toward their fellow members in a very significant way. The fact that the weakest bonds are able to create positive in-group interaction is an important consideration when examining the relation between perceptions of social i dentity and expressions of social preferences.While group membership is a powerful force, transnational studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more trusting when paired with in-group members but that this is not the case for subjects from China and Japan, who are more trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations across genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and reciprocation levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingl y irrelevant conversations significantly increased the levels of these social preferences.Regardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict how they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these imperfect images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. Taking into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept closely linked with trust.The concept of trust, as mentioned earlier is based on confidence and at the heart of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, although proven in studies referred to above, is readily seen in everyday life. Trust can be unquestioned with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is dang erous and cannot be trusted. It is perceived as the expression of an identity, the perception of which can influence our attitudes and behaviour.The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however minimal, show the great influence groups have on these social preferences. One explanation of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their counterpart expects them to be. Akerlofs (19971008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The Conformist Model. A reduction of social distance between players can also be achieved by perceived acts of kindness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities.Two significant ways in which individuals identify themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal divider of the human race, preceding all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the opposite sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and privilege structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both family life and work life. Lockheed (1985) supposes that women are conceived as compliant followers and men dominant leaders only because of the common minority and majority balance that is common in social and work situations. The large disparity between the social identity and actual realities of members of the opposite sex provides a good opportunity to explore to what extent interaction is based on unqualified perceptions and to map the effect of variations in this perception.Unlike gender identities, nationalism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse natio ns such as India and Russia, but divided others as seen in the cases of North and South Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards fellow nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964378) notes that governments utilise nationalistic instruments for the purpose of increasing the share of assets in a given assets in a given territory owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of investment and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The practice of promoting these nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups d o.The membership of these nation-groups is defined according to several commonalities. Members share an economy, a historic territory, myths and memories, a public culture, and a set of legal rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary considerably in their social and personal identities. The minimal nature of the nation-group is accepted by many academics, some seeing nationalism as an ironic tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (19693) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through the stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed.Experimental Design and ImplementationIt is social identity and its inherently variable quality that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences mani fested. Given its ability to expose these preferences, an extension of the Trust Game is used