Why and How Identity Should Influence Utility

Abstract

This paper provides an argument for the advantage of a preference for identity-consistent behaviour from an evolutionary point of view. Within a stylised model of social interaction, we show that the development of cooperative social norms is greatly facilitated if the agents of the society possess a preference for identity consistent behaviour. As cooperative norms have a positive impact on aggregate outcomes, we conclude that such preferences are evolutionary advantageous. Furthermore, we discuss how such a preference can be accounted for in the modelling of utility in order to account for the distinctive cooperative trait in human behaviour and show how this squares with the evidence.

Keywords: Cooperation, Evolution, Identity, Social Norms, Utility

JEL Classification: A13, C90, D01, Z13