A Theory of the Material Foundation of Psychology: With an Application to the Non-Salience of Economic Classes

Chiu, Y. Stephen; Zhong, Weifeng

doi:10.2139/ssrn.1862478

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A Theory of the Material Foundation of Psychology: With an Application to the Non-Salience of Economic Classes

43 Pages Posted: 11 Jun 2011 Last revised: 16 Apr 2018

See all articles by Y. Stephen Chiu

Y. Stephen Chiu

The University of Hong Kong - School of Economics and Finance

Weifeng Zhong

Mercatus Center at George Mason University

Date Written: June 20, 2013

Abstract

We present a framework of group cooperation and competition in which agents are concerned not only about their material payoffs but also about their psychological payoffs, derived from working with others per se. We show a material foundation to such psychology – the stronger a group’s psychological preferences are, the greater its bargaining power will be in determining its terms of cooperation with other groups. We also generate implications that are consistent with two contemporary phenomena – the declining importance of class in the politics of industrial economies and the salience of race in the third world.

Keywords: class; race; intergroup relationship; group identity; group loyalty; psychology

JEL Classification: D74, H00, O10

Suggested Citation: Suggested Citation

Chiu, Yiu Wah Stephen and Zhong, Weifeng, A Theory of the Material Foundation of Psychology: With an Application to the Non-Salience of Economic Classes (June 20, 2013). Available at SSRN: https://ssrn.com/abstract=1862478 or http://dx.doi.org/10.2139/ssrn.1862478