Optimal Self-Screening and the Persistence of Identity-Driven Choices

Caroline W. Liqui Lung

Janeway Institute Working Papers from Faculty of Economics, University of Cambridge

Abstract: Equally performing individuals belonging to different social groups make different occupational and educational choices. I propose a novel explanation for this phenomenon by showing how agents can use statistics about the prevalence of their social type among those successful in a task to limit the adverse effects of momentary noise on decision making when they cannot control for this noise as a Bayesian would. This improves decision making on average, even when the statistics are informationally irrelevant, but can create persistent asymmetries in choice behavior across otherwise identical individuals with different social types that are not driven by ability differences.

Keywords: Bounded Rationality; Decision Making; Social Identity (search for similar items in EconPapers)
JEL-codes: D81 D91 Z13 (search for similar items in EconPapers)
Date: 2022-12-15
New Economics Papers: this item is included in nep-evo
Note: cll64
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:cam:camjip:2232

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