Identity and why we cooperate with those we do

That individual identity influences economic decision making was convincingly argued by Akerlof and Kranton [Akerlof, G., & Kranton, R. (2000). Economics and Identity. Quarterly Journal of Economics, 115, 715–753; Akerlof, G., & Kranton, R. (2005). Identity and the economics of organizations. Journal of Economic Perspectives, 16, 9–32]. However, for their argument they consider only tradeoffs between one particular identity (e.g. as a worker) and standard economic incentives. Yet, individual identity commonly is based on the social affiliation with different groups. Hence, conflicting interests also concerning identity may arise. This paper addresses the question what happens in these cases and why, and what the economic consequences will be. Both the implications for the framing of economic decisions and for political integration processes are discussed.