During the past academic year I undertook a research program together with Subhasish Dugar (University of Calgary, Canada). We designed a laboratory experiment to investigate the causal relation between group membership and opportunistic behaviour in a context that is ridden with informational asymmetry. We have collected data from two experimental sessions, and currently working on the related research paper.

The context we focus on, otherwise known as an adverse selection problem, deals with two economic actors (a principal and an agent) who face a potential collaboration on a mutually beneficial project. If the principal decides to work with the agent, she may offer a contract that specifies a wage for the agent in exchange of which the agent is believed to put in work effort that benefits principal’s payoff. However, the agent could be a high calibre or a low calibre agent, and while that characteristic has an important impact on the results/outcome the agent is able to produce, it constitutes private information for the agent. Standard, neoclassical economic theory suggests that in our framework no interaction (between the principal and the agent) will take place. 

With the help of our experiments we would like to test a behavioural model which incorporates group identity and suggests a possible solution to the above-described adverse-selection problem. Simply put, we ask: what happens if both the principal and agent are from the same group?