Institution, Social Identity and Cooperation : Evidence from the One Country, Two System Paradigm

Little is known on how social identity affects cooperation in a unique “One Country, Two Systems” (OCTS) paradigm. We conducted an experiment comparing the coop-erative behaviors of subjects from the mainland China and special administrative re-gions of Hong Kong and Macao (HK–MC). When subjects are aware of their random-ly paired partner’s specific OCTS-associated identity, HK-MC subjects reveal univer-salistic preferences, keeping the same cooperation level across different identity treatments. However, mainland subjects reveal particularistic preferences, showing ingroup favoritism. The difference is more pronounced amongst females, only chil-dren, those from high-income families, and subjects who are risk-averse, pro-self, and care about Taiwan’s reunification