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Social Foundations of Identities and Economic Dysfunctions

Paper Session

Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM

Marriott Philadelphia Downtown, Grand Ballroom Salon B
Hosted By: American Economic Association
  • Chair: Rob Johnson, Institute for New Economic Thinking

Sins of Omission and the Practice of Economics

George Akerlof
Georgetown University


This paper advances the general proposition that full coverage of the subject matter of economics requires a combination of two types of task: Hard and Soft. Rewards in publication and in promotion are accorded to Hard tasks; denied to Soft. These incentives have biased the practice of economics. Thus this essay is an application of the theory of multi-tasking, with agents dividing their effort between tasks, according to the respective rewards. It will give examples of resultant sins of omission.

Individuation and Prosocial Behavior

Victoria Lee
Rachel Kranton
Duke University
Scott Huettel


Seeing another person as an individual, or human, is considered an effective way to increase prosocial behavior, especially in order to counter intergroup biases. The literature suggests individuation is beneficial for outgroup members, but the effects of humanization on an ingroup member are less clear-individuation may increase, decrease, or have no effect on prosocial behavior. In two studies, participants allocated money given knowledge of their group membership. Humanization was manipulated by providing one line of additional information that either reinforced the group membership or humanized the recipient. We found robust support for a competitive model of humanization in which group and individual identities compete; specifically, humanizing information increased pro-social behavior toward outgroup members but decreased pro-social behavior toward ingroup members.

Narratives, Organizational Ethics and Social Dysfunction

Steven Bosworth
Kiel Institute for the World Economy & University of Reading
Dennis J. Snower


Abstract This paper presents a model of the determinants of organizational culture, based on narratives and associated identities. Contractual relations between employees and managers in any organization are incomplete, and thus managers gain an incentive to use narratives to shape worker identities in order to reach the organization's goals. Different narratives give rise to different managerial moral sensitivities, inducing managers to adjust their corporate culture, in terms of the manager's efforts to instill the organizations's overt moral standard. Thereby managers affect workers' internal moral standards and consequently affect the workers' propensity to engage in socially harmful activities. Dysfunctional organizational cultures can persist in equilibrium. The model explains why cross-sectionally we see high wages in organizations with strong cultures and worker attachment, while for managers the two are substitutable incentives. We explore policy implications with an eye towards strengthening organizational cultures which discourage unethical behavior.
JEL Classifications
  • A1 - General Economics
  • D2 - Production and Organizations