(in collaboration with Michalis Drouvelis and Nicolaas J. Vriend)
This experiment focuses on two questions: First, are individuals willing to incur a cost to signal their true (or false) group identity to a person they are matched to interact with? Second, we test whether a true (or false) identity signal can help players to coordinate on a more socially efficient outcome in subsequent play of a coordination game involving a risk-return trade-off. We find that a significant proportion of subjects care about their group identity or believe that it matters enough to send a costly signal to others. Effort levels in the out-group treatment increase significantly when participants are allowed to lie about their group identity compared to the case when they are not allowed to lie.