Individual Behavior and Group Membership 1

People who are members of a group, and identify with it, behave differently from people in isolation. The way in which the behavior differs depends in subtle ways from the way in which the nature of the group is perceived, as well as its saliency, and also on the way in which people perceive that the behavior of others is affected by the group. We study these hypotheses in a strategic experimental environment. Participants are allocated randomly to two groups (Row and Column players), and a room is assigned to each group. The saliency of the group membership is manipulated by making the group present as an audience in the corresponding room, or not. We use two stage games, the Battle of the Sexes and Prisoner’s Dilemma. We show that the saliency of the group affects behavior of members, as well as the behavior of people in the other group, and that participants anticipate these effects. Group membership increases the aggressive stance of the hosts (people who have their group members in the audience). The effect on the outcomes of this increased aggressive stance depends on the game: In the Battle of the Sexes, the aggressiveness of hosts leads to coordination on an efficient, alternating outcome; in the Prisoner’s Dilemma, it leads to conflict and inefficient outcomes. 1 Gary Charness, Dept. of Economics, UCSB, 2127 North Hall, Santa Barbara, CA 93106-9210, 805-893-2412, [email protected]; Luca Rigotti, Fuqua School of Business, Duke University, Box 90120, Durham, NC 27708, 919-660-7780, [email protected]; Aldo Rustichini, Dept. of Economics, University of Minnesota, 1035 Heller Hall, 271 19 Avenue South, Minneapolis, MN 55455, 612-625-4816, [email protected] The research was supported in part by research funds from UCSB, research funds from Duke University, and the NSF grant NSF/SES-0136556 to Aldo Rustichini.