Identity and the Dynamics of Preferences

Davide Dragone, Michele Viviani, Giacomo Calzolari, Emanuela Carbonara, Matteo Cervellati, Tiziana Mancini, Arsen Palestini, Federico Perali, Pier Sacco, Claudio Zoli
Some recent economic contributions have studied individual identity in terms of explicit choices and social categories to which a person belongs to. According to Social Psychology, identity is also the result of a process in ‡uenced by self-regulation mechanisms. We model en-dogenous identity-dependent preferences as the dynamic result of two mechanisms: environmental pressure and the persistent e¤ect of past socialization in the adaptation to new environments We apply this model to
more » ... where the agent must trade-o¤ con ‡icting utility functions, such as material and non-material pay-o¤s, or self-interest and other-regarding preferences. The model shows that heterogeneity in individual preferences, besides being the result of socialization, cultural transmission and environmental incentives, critically hinges on the feedback of behaviour on preferences 1 .