Identity and the Dynamics of Preferences

Some recent economic contributions have studied individual iden-tity in terms of explicit choices and social categories to which a person belongs to. According to Social Psychology, identity is also the result of a process inuenced by self-regulation mechanisms. We model en-dogenous identity-dependent preferences as the dynamic result of two mechanisms: environmental pressure and the persistent e¤ect of past socialization in the adaptation to new environments We apply this model to environments where the agent must trade-o ¤ conicting utility functions, such as material and non-material pay-o¤s, or self-interest and other-regarding preferences. The model shows that heterogeneity in individual preferences, besides being the result of socialization, cultural transmission and environmental incentives, critically hinges on the feed-back of behaviour on preferences1