Like Everybody Else: Experimental Economics of Conformity, Image, and Identity
Friday, Jan. 5, 2018 2:30 PM - 4:30 PM
- Chair: James Andreoni, University of California-San Diego
Status Goods: Experimental Evidence From Platinum Credit Cards
AbstractThis paper provides the first field-experimental evidence of status goods. We work with an Indonesian bank that markets platinum credit cards to high-income customers. In the first experiment, we show that demand for the platinum card is substantially higher than demand for its tangible benefits and services. Transaction data reveal that platinum cardholders are more likely to use the card in social contexts where others may notice it, implying social image concerns. Finally, we show that higher self-esteem causally reduces demand for status goods, suggesting that self and social image are substitutes.
Preference Endogeneity and Conformity
AbstractSome theories of conformity hold that social equilibrium either standardizes inferences or promotes a shared understanding of conventions and norms among individuals with fixed heterogeneous preferences (belief mechanisms). Others depict tastes as fluid and hence subject to social influences (preference mechanisms). Belief mechanisms dominate discussions of conformity within economics, but preference mechanisms receive significant attention in other social sciences. This paper formulates a theory of conformity based on preference mechanisms, and then seeks to determine whether conformity is attributable to belief mechanisms or preference mechanisms by exploiting their distinctive implications for the process of convergence. Laboratory experiments suggest that economists have focused too narrowly on explanations for conformity involving belief mechanisms.
Social Change and the Conformity Trap
AbstractThe ability of societies to adapt to a changing world is critical for welfare. We present evidence from a new laboratory experiment in which individuals' preferences change over time and there is a pressure to conform to the behavior of the majority. In the baseline environment, groups fail to adapt behavior to the changing circumstances despite the common knowledge that it has become inefficient and undesirable to almost all group members. We then explore factors that may help avoid these conformity traps, such as organizing opinion polls, expediting social feedback, increasing tolerance, and rewarding instigators of change. We also show that change is hindered by risk aversion but promoted by individuals who derive utility from defying the pressure to conform.
University of Michigan
University of California-San Diego
New York University
- C9 - Design of Experiments