Group Identities in Conflicts

If the members of a group identify with their group, free-riding behavior within the group is reduced. This seems beneficial at first sight. However, in contests between groups, identification escalates conflicts, increasing rent dissipation and possibly generating welfare losses. Generally, in an inter-group conflict the adoption or non-adoption of a group identity is endogenous. We show that, if groups are similar in size and conflict technology, all groups will adopt a group identity, reducing welfare for all. If groups are unequal, the stronger one will develop a group identity, which goes at the expense of the weaker group. Out-group hostility favors asymmetric identities. Applications include team spirit in war and sports, national identities or (seemingly) dysfunctional behavior of social groups.