Identities, selection, and contributions in a public-goods game

The notions of one's social identity and group membership have recently become topics for economic theory and experiments, and recent research has shown the importance of identity in a wide array of economic environments. But predictions are unclear when there is some trade-off between one's identity (e.g., race, gender, handedness) and potential monetary considerations. We conduct a public-goods experiment in which we permit endogenous group-formation. In a 2x2 design, we vary whether people participate in a team-building exercise and whether some people receive an endowment twice as much as others receive. We find that when both identity and financial considerations are present, high-endowment participants are strongly attracted to each other, with one's word-task-group affiliation eclipsed by the opportunity to earn more. Nevertheless, the team-building exercise greatly increases the level of contribution whether or not one is linked to people from one's team-building exercise.