The strategic use of social identity

Individuals often have the power to manipulate which of their multiple dimensions of social identity are salient when entering economic interactions. This paper represents the first empirical exploration of this phenomenon. Experimental results show identity dimension choice is of substantial importance, providing potential earnings gains up to around 56%. Actual gains are smaller: people choose identity dimensions strategically and benefit from broadly accurate beliefs about counterparts’ discriminatory tendencies, but are also hampered by some misperceptions (e.g. overestimating levels of in-group favouritism). Furthermore, many individuals sacrifice expected payoffs to make their preferred dimensions salient, suggesting intrinsic utility derives from social identity.