Abstract

In a laboratory experiment, we explore the effects of group identities on the principal-agent relationship between voters and representatives. In an adverse selection framework with observable effort, voters can choose to condition their reelection choices on representatives' effort alone, beliefs about representatives' competence, or both of those jointly. We show that inducing social identities increases the weight of representatives' effort in voters' reelection decisions. Further, when voters and representatives share a social identity, representatives tend to invest less effort and their effort is independent of their competence. In contrast, "out-group" representatives compensate for lower competence with higher effort and reduce effort when voters are likely to perceive them as competent. Voters often adopt laxer retention standards for representatives who are fellow group members and are responsive to evidence of other-regardingness from out-group representatives, but some voters actively resist treating representatives with shared identity more favorably and "overcorrect" as a consequence.