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Abstract

We study the impact of social identity on risk sharing behavior in an ethnically diverse society in the Central Highlands of Vietnam. We ran Solidarity Games with 285 male household heads from two distinct ethnic groups. We varied participants' social identity by altering the ethnic composition in the risk-sharing group of three. Our main strategy is to influence identity induced solidarity towards the unlucky coplayer by manipulating the identity of the non-affected third player. Our results are consistent with social identity theory, predicting that identity is endogenous to group composition. We partially confirm existing evidence on in-group favoritism, once identity becomes salient. Additionally, we find that those subjects that constitute the minority in the risk-sharing group show adaptive behavior by imitating the perceived norm of the dominant ethnic group. These results suggest that identity is context specific. Particularly, the rather disadvantaged group in the heterogeneous society seems to adapt their behavior to the social environment.

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