Group Identification and Decision Disclosure Effects on Costly Decisions to Reduce Group Risk

40 Pages Posted: 27 Apr 2006 Last revised: 12 Aug 2008

See all articles by Ning Du

Ning Du

DePaul University - School of Accountancy and MIS

Marjorie K. Shelley

University of Nebraska at Lincoln - School of Accountancy

Hongmei Zhao

University of Illinois at Urbana-Champaign

Date Written: July 30, 2008

Abstract

Our experiment investigates using group identification and decision disclosure to reduce partners' tendencies to risk partnership assets for personal gain. We manipulate group identity (weak, strong) and decision disclosure (yes, no) and ask participants to decide whether to protect partnership assets from their randomly-determined bad outcomes. We find that (1) strong group-identity participants are more likely to protect their group than weak group-identity participants; (2) weak group-identity participants are more likely to protect their group when protection decisions will be disclosed; and (3) the strong group identity advantage declines when protection decisions will be disclosed. These findings are important to decentralized professional partnerships hoping to reduce reputational risk without restructuring compensation and to researchers studying incentive effects in professional settings.

Keywords: Public Goods, Reputations, Group Identity, Decision Disclosure, Firm Risk, Professional partnerships

JEL Classification: H41, L20, M49

Suggested Citation

Du, Ning and Shelley, Marjorie and Zhao, Hongmei, Group Identification and Decision Disclosure Effects on Costly Decisions to Reduce Group Risk (July 30, 2008). Available at SSRN: https://ssrn.com/abstract=897794 or http://dx.doi.org/10.2139/ssrn.897794

Ning Du

DePaul University - School of Accountancy and MIS ( email )

1 E. Jackson Blvd
Chicago, IL 60607
United States
312-362-8308 (Phone)

Marjorie Shelley (Contact Author)

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Hongmei Zhao

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

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