Akerlof and Kranton on Identity in Economics, Research Memoranda in the History and Methodology of Economics

The concept of identity was introduced into economics by Akerlof and Kranton in an analysis which draws directly on social psychology’s social identity approach and self-categorization theory. This paper compares the social identity approach and an alternative social psychology identity framework called the sociological approach to identity, and then paper argues that their treating identity as an argument in the utility function leaves unaddressed the issue of the behavioral implications associated with how individuals' different social identities are related. The paper provides a framework for addressing this issue by embedding their utility function in a personal identity objective function.

Keywords
identity in economics, social identity approach, sociological approach to identity, personal identity objection function, recent economics