Effects of Manipulating Individual Identity

Effects of Manipulating Individual Identity Abstract: This study examined how changing the perception of social distance changed the way in which subjects interacted in the Trust Game specifically looking into the social preferences they displayed. A discussion of both economic and sociological research demonstrates the inherent variability of social identity and social distance and the interconnected nature these concepts have with social preferences. A two-stage experiment involving subjects of different nationalities and genders was carried out with a different identity focus in each stage. Findings show that subjects exhibit greater social preferences when interacting with those of a similar focused identity yet the degrees of these preferences displayed vary in accordance to the identity focus. Results suggest that social distance, although easily manipulated, is a powerful force in interactions. The results are consistent with previous studies into group membership, identity, nationality, gender and social preferences. Given this studys far-reaching implications it should be viewed as the premise for future study of this topic. Introduction The concept of social distance as elucidated by Akerlof (1997) is profoundly linked with social identity and social preferences. It is the differences in individuals social identities, including for example, race, gender, class and status, that determine the benefits of interaction and to what extent of social preferences are displayed. Yet when individuals are not entirely familiar with each other, the perception of social identities is based on very few observations and is therefore not entirely accurate. The purpose of this dissertation is to examine whether or not variations in the perception of social identity, and thus social distance, will affect the extent to which social preferences are manifested. Studies on the effect of identity are in no way new. Akerlof and Kranton (2000) studied its relevance and magnitude with regards to gender discrimination in the workplace, poverty and social exclusion, and the household division of labour. Akerlof (1997) also studied the effect of social distance, asserting that the social identity of individuals can substantially affect their interactions. What has not been tested, however, is to what extent identity is merely a perception. Individuals can and do possess multiple identities varying in dominance from situation to situation. The hypothesis of this paper is that social preferences are relevant in experimental games, but these are dependent on how each player perceives the others social identity, a perception that is inherently variable. Players react with varying degrees of self-interest according to the identity they perceive, even when identical character profiles are involved. Recent economic studies fail to sufficiently incorporate current sociological thinking as to the nature of social identity and although this study will give evidence for the relevance of social distance in determining degrees of social preferences, it will attempt to shed light on individuals inconsistent perception of the distance between them. In order to add weight to this position, an experiment was organised in which participants of various profiles were invited to play the Trust Game. Each game was played face-to-face with no verbal communication. The experiment was divided into two stages, a nationality focused stage and a gender focused stage. Each participant played the game twice and never with the same opposing player. Before each game, participants were assigned to certain rooms in which video clips were played depending on the identity focused on. In the first stage, participants were split into three rooms, one for each nationality present: Scottish, English and Chinese. After one play of the Trust Game, the experiment commenced its second stage and participants were split into two rooms, one for each gender, and again asked to play the game. The results show that there is significant variation in the degrees of social preferences displayed depending on the identity being focused on hereafter referred to as the focused identity. When nationality was the focused identity, those with this common identity exhibited greater social preferences than those of differing nationalities, regardless of gender. When gender was the focused identity, those with this common identity exhibited greater social preferences than those of differing gender, regardless, to some extent, of nationality. This lack of consistency shows that the perception of social distance is not a constant through both stages and yet it is still proves to be a determining factor in how players interact. The following content of this paper is arranged into four sections. Section 2 will address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, discussing the application of various theories in the context of this study. Section 3 will describe the design and implementation of the experiment used in this study with the results, analysis and comparisons to similar studies presented in Section 4. An interpretation of these results and further conclusions will be offered in Section 5. Theories of Preferences and Identity To clearly understand the argument presented, a holistic discussion of current theories must be embarked upon. The relevance of social preferences and the forms of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will then be considered before discussing their relationship with social preferences. Social Preferences The assumption that man is motivated by self-interest is one that has dominated economic theory and is indeed fundamental to the very ideology of the vast majority of economists. As Adam Smith (1910:13) suggests, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Inherent in this analogy is the implication that self-interest is the primary motivator in our economic interactions, and it is through this impulse that equilibria are formed. In Game Theory, the Nash Equilibrium is obtained by each player assuming the other possesses purely selfish motives. This assumption, however, is not always consistent with reality. Many factors influence an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions can relate to social status, group membership, inequity aversion, reciprocity, s pite, envy, altruism and identity. These factors form a preference set, referred to in this study as social preferences. Although the theory of self-interest has been ingrained in traditional economics, modern economists have increasingly questioned this supposition. In fact the traditional authors of this theory were also wary of its realism. Even though Edgeworth (1881:16) writes that the first principle of Economics is that every agent is actuated only by self-interest, he concedes that Man is, in reality, for the most part an impure egoist, a mixed utilitarian, (Edgeworth 1881:104). It is evident that we are influenced by unselfish motives in our interactions with others and it follows that these interactions will in many circumstances involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977:336), in his seminal paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to being a social moron. He argues that theories that do not encompass the influence of sympathy and our commitment to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no society would be feasible (Johansen 1977). In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, inequity aversion, altruism and trust are all basic components of this preference set (Andreoni et al. 2002). When kindness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to rebel against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. Trust is the confidence in the future actions of another and is arguably the most variable of the social preferences and one that will be revisited in this study. Each of these attributes are far from abstract philosophical concepts, exert great influence on our economic interactions. Agell and Lundberg (1995) discovered that as a result of workers being influenced by fairness and equity customs, wage cuts were often unprofitable, with workers objecting to an unfair action. This can have a direct impact on the extent that a company vertically integrates, with out-sourcing often being far more viable given the reciprocal attitude of workers. Bewley (1999) also noted that a firms policy can affect worker morale and as such companies must take into account the perceived fairness of their policies. The extent of tax evasion has also been correlated to how fair it is perceived, and in fact the entire structure of tax systems are thoroughly debated and altered according to the principles of equity and merit (Seidl and Traub 2002). The perception of unreciprocated generosity has been one of the causes of the general reduction in support from the US w elfare state. People are disinclined to support welfare structures that give the impression that they are helping a poor segment of society that refuse to help themselves, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) also correlates economic prosperity with higher levels of trust, suggesting that social preferences are a very powerful force even in the current global economic system. Sequential games Although the examples given are wide-ranging in scope, involving relatively large economic issues, social preferences have also been proven to have a significant effect on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by assuming that all agents were exclusively self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game. There are two players in the game, one a Proposer and one a Responder. The Proposer must divide an amount of money X between the two players, offering the Responder any amount Y = X. If Responder accepts, the Proposer receives the remaining money X – Y, if they reject, both receive nothing. Under self-interested preferences, the efficient equilibrium is the one in which the Proposer gives the least amount possible to the Responder, who will accept any amount. In reality however, offers of less than a fifth of X are rejected about half time and Proposers anticipating this generally offer around 30 to 50 percent of X (Hoffman et al. 1996). This result clearly shows that factors other than self-interest are at play. It would be reasonable to assume that altruism and reciprocity both play a part in the decision-making process of both players. The Proposer may be influenced by a code of morals and a concept of fairness to offer more than the standard equilibrium distribution. The P roposer must also take into account the Responders sense of reciprocity and animosity towards a seemingly unfair distribution. Although the Responder is under no monetary incentive to reject a low offer, yet his social preferences mean that he is able to achieve some utility by spiting the Proposer, thereby valuing a certain amount of reciprocity over monetary value. Given the fact that the Proposers actions may be driven only by the fear of reciprocity and no sense of altruism, it is worthwhile to look into the Dictators Game first introduced by Kahneman et al. (1986) and refined by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the amount given by the Proposer. If the Proposer is motivated by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the case. Henrich et al. (2001) find that in most dictator game experiments there is a primary mode offer of zero percent of the Proposers total wealth and a secondary mode offer of 50 percent. Some groups show a primary mode offer of 20 percent and a secondary mode of 50 percent providing strong evidence of inequity aversion. In addition to supporting the notion that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present i n the Ultimatum Game and that Proposers apply backwards induction with average offers being lower in the Dictator Game (Roth et al. 1991). The Trust Game, developed by Berg et al. (1995) is a game that can be used to test the presence of altruism, inequity aversion, reciprocity and its namesake, trust. The game is played with an Investor and a Trustee, with the former being given an initial endowment of X and the latter given nothing. The Investor is then able to give any amount Y between 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z between 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X – Y + Z and 3Y – Z respectively. The Trustee is under no monetary incentive to return any amount and as such, under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictator Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that almost all Investors give so me amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given thus supporting the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to display inequity aversion by choosing to give or return amounts that will equalise final payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is interesting to note that there is substantial variation in the amounts given, with no clear average amount entrusted. The variation is not unsurprising, however, given the inherent inconsistency in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceived id entity of the individual in question. Identity Identity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the consideration of these two concepts that decisions are made. Descartes (1912:167) famously stated †¦I think, therefore I am, and in doing so sparked off the philosophical debate on what truly directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his belief that we can only perceive ourselves, and build our identity, by categorisation in the light of selected characteristics and never perceive our true reality in objective terms. It is out-with the bounds of this study to discuss in depth the sociological and psychological complexities of this topic, yet it is worth-while bringing to light some key concepts to further the understanding of the interactions between this studys participants. An identity is a tool of recognition. It allows us to recognise individuals, categories, groups and types of individuals, Wiley (1994:130). More than this, it is also a tool of categorisation and emotional cues. It implies a conscious awareness by members of a group, some positive or negative emotional feelings towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994:177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections: the personal identity, the ego identity and the social identity. The personal identity is the unique identification that each individual possesses to differentiate themselves technically, legally and realistically from all others. The ego identity is a purely subjective observation that is built from a multitude of social experiences and is a sense of ones own particular state and nature. The social identity pr ovides a way of categorising people and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be grouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and political views. It is important to stress that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation. Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant influence on our decisions and actions. Their theorem sheds light on a number of seemingly irrational choices. Actions that are of apparent detriment to an individual can be viewed as a form of behaviour that it used to create a more unique self identity. Similarly, steps may be taken to symbolise the assumption of a particular identity or the membership of a certain group, be they conscious or otherwise. Men do not generally wear dresses, and as such this behavioural code is unconsciously subscribed to by the majority of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of manhood itself. Attempts to manipulate an individuals decisions can be based on the notion of identity. In order to influence people to buy their products, companies create advertisements that often show a stylised form of a particular identity that people may aspire to. Finally, as identity can play such a large role in determining our economic decisions and behaviour, and assuming that individuals can choose their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a conclusion strengthened by the theory of role-identities. It is difficult to determine to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are deeply interconnected. Lyman and Scott (1970:136) clarify this link by stating that roles are identities mobilised in a specific situation; whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also assume a role. Despite that the fact that this role varies from situation to situation, it is at all times consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced by considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive positive feedback o r avoid negative feedback. In order to assess these expectations and act accordingly, we must first judge what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-specified contours of their social roles, (McCall and Simmons, 1978:70). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an objective character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing social distance. Identities and Social Preferences Akerlof (1997) defined social distance as a measure of social proximity between individuals. The model he created summarises that people gain benefits from interacting to those socially closer to themselves, with these benefits decreasing with isolation. This model is supported by empirical evidence that suggests that trust and reciprocity are linked with social connection and that members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results. Studying the effects of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. Through using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is that subjects react to membership in a very subjective manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most minimal connections within a group still give rise to in-group positive discrimination. Although subjects realised that the basis of group composition wa s entirely random, they still discriminated toward their fellow members in a very significant way. The fact that the weakest bonds are able to create positive in-group interaction is an important consideration when examining the relation between perceptions of social identity and expressions of social preferences. While group membership is a powerful force, transnational studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more trusting when paired with in-group members but that this is not the case for subjects from China and Japan, who are more trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations across genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and reciprocation levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingly irrelevant conversations significantly increa sed the levels of these social preferences. Regardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict how they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these imperfect images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. Taking into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept closely linke d with trust. The concept of trust, as mentioned earlier is based on confidence and at the heart of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, although proven in studies referred to above, is readily seen in everyday life. Trust can be unquestioned with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is dangerous and cannot be trusted. It is perceived as the expression of an identity, the perception of which ca n influence our attitudes and behaviour. The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however minimal, show the great influence groups have on these social preferences. One explanation of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their counterpart expects them to be. Akerlofs (1997:1008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The Conformist Model. A reduction of social distance between players can also be achieved by perceived acts of kindness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities. Two significant ways in which individuals identify themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal divider of the human race, preceding all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the opposite sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and privilege structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both f amily life and work life. Lockheed (1985) supposes that women are conceived as compliant followers and men dominant leaders only because of the common minority and majority balance that is common in social and work situations. The large disparity between the social identity and actual realities of members of the opposite sex provides a good opportunity to explore to what extent interaction is based on unqualified perceptions and to map the effect of variations in this perception. Unlike gender identities, nationalism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse nations such as India and Russia, but divided others as seen in the cases of North and South Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards fellow nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964:378) notes that governments utilise nationalistic instruments†¦ for the purpose of increasing the share of assets in a given assets in a given territory owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of investment and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The practice of promoting thes e nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups do. The membership of these nation-groups is defined according to several commonalities. Members share an economy, a historic territory, myths and memories, a public culture, and a set of legal rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary considerably in their social and personal identities. The minimal nature of the nation-group is accepted by many academics, some seeing nationalism as an ironic tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (1969:3) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through the stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed. Experimental Design and Implementation It is social identity and its inherently variable quality that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences manifested. Given its ability to expose these preferences, an extension of the Trust Game is used Effects of Manipulating Individual Identity Effects of Manipulating Individual Identity Abstract: This study examined how changing the perception of social distance changed the way in which subjects interacted in the Trust Game specifically looking into the social preferences they displayed. A discussion of both economic and sociological research demonstrates the inherent variability of social identity and social distance and the interconnected nature these concepts have with social preferences. A two-stage experiment involving subjects of different nationalities and genders was carried out with a different identity focus in each stage. Findings show that subjects exhibit greater social preferences when interacting with those of a similar focused identity yet the degrees of these preferences displayed vary in accordance to the identity focus. Results suggest that social distance, although easily manipulated, is a powerful force in interactions. The results are consistent with previous studies into group membership, identity, nationality, gender and social preferences. Given this studys far-reaching implications it should be viewed as the premise for future study of this topic. Introduction The concept of social distance as elucidated by Akerlof (1997) is profoundly linked with social identity and social preferences. It is the differences in individuals social identities, including for example, race, gender, class and status, that determine the benefits of interaction and to what extent of social preferences are displayed. Yet when individuals are not entirely familiar with each other, the perception of social identities is based on very few observations and is therefore not entirely accurate. The purpose of this dissertation is to examine whether or not variations in the perception of social identity, and thus social distance, will affect the extent to which social preferences are manifested. Studies on the effect of identity are in no way new. Akerlof and Kranton (2000) studied its relevance and magnitude with regards to gender discrimination in the workplace, poverty and social exclusion, and the household division of labour. Akerlof (1997) also studied the effect of social distance, asserting that the social identity of individuals can substantially affect their interactions. What has not been tested, however, is to what extent identity is merely a perception. Individuals can and do possess multiple identities varying in dominance from situation to situation. The hypothesis of this paper is that social preferences are relevant in experimental games, but these are dependent on how each player perceives the others social identity, a perception that is inherently variable. Players react with varying degrees of self-interest according to the identity they perceive, even when identical character profiles are involved. Recent economic studies fail to sufficiently incorporate current sociological thinking as to the nature of social identity and although this study will give evidence for the relevance of social distance in determining degrees of social preferences, it will attempt to shed light on individuals inconsistent perception of the distance between them. In order to add weight to this position, an experiment was organised in which participants of various profiles were invited to play the Trust Game. Each game was played face-to-face with no verbal communication. The experiment was divided into two stages, a nationality focused stage and a gender focused stage. Each participant played the game twice and never with the same opposing player. Before each game, participants were assigned to certain rooms in which video clips were played depending on the identity focused on. In the first stage, participants were split into three rooms, one for each nationality present: Scottish, English and Chinese. After one play of the Trust Game, the experiment commenced its second stage and participants were split into two rooms, one for each gender, and again asked to play the game. The results show that there is significant variation in the degrees of social preferences displayed depending on the identity being focused on hereafter referred to as the focused identity. When nationality was the focused identity, those with this common identity exhibited greater social preferences than those of differing nationalities, regardless of gender. When gender was the focused identity, those with this common identity exhibited greater social preferences than those of differing gender, regardless, to some extent, of nationality. This lack of consistency shows that the perception of social distance is not a constant through both stages and yet it is still proves to be a determining factor in how players interact. The following content of this paper is arranged into four sections. Section 2 will address the relevant literature with regards to social preferences and identity, showing their relevance, interconnected nature and inherent variability, discussing the application of various theories in the context of this study. Section 3 will describe the design and implementation of the experiment used in this study with the results, analysis and comparisons to similar studies presented in Section 4. An interpretation of these results and further conclusions will be offered in Section 5. Theories of Preferences and Identity To clearly understand the argument presented, a holistic discussion of current theories must be embarked upon. The relevance of social preferences and the forms of their analysis through experimental games will be examined in this section to create the context in which this study is placed. The concepts of identity and how they shape perceptions and interactions will then be considered before discussing their relationship with social preferences. Social Preferences The assumption that man is motivated by self-interest is one that has dominated economic theory and is indeed fundamental to the very ideology of the vast majority of economists. As Adam Smith (1910:13) suggests, It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Inherent in this analogy is the implication that self-interest is the primary motivator in our economic interactions, and it is through this impulse that equilibria are formed. In Game Theory, the Nash Equilibrium is obtained by each player assuming the other possesses purely selfish motives. This assumption, however, is not always consistent with reality. Many factors influence an individuals decisions and it is evident that the maximisation of material gain is not always a dominating motivation. Some of the factors influencing an individuals decisions can relate to social status, group membership, inequity aversion, reciprocity, s pite, envy, altruism and identity. These factors form a preference set, referred to in this study as social preferences. Although the theory of self-interest has been ingrained in traditional economics, modern economists have increasingly questioned this supposition. In fact the traditional authors of this theory were also wary of its realism. Even though Edgeworth (1881:16) writes that the first principle of Economics is that every agent is actuated only by self-interest, he concedes that Man is, in reality, for the most part an impure egoist, a mixed utilitarian, (Edgeworth 1881:104). It is evident that we are influenced by unselfish motives in our interactions with others and it follows that these interactions will in many circumstances involve material profit and loss. This is the realm of social preferences. Amartya Sen (1977:336), in his seminal paper on the irrationality of traditional preference theory states that the purely economic man is indeed close to being a social moron. He argues that theories that do not encompass the influence of sympathy and our commitment to it are incomplete. It is the result of this basic emotion that our social norms, laws and codes of conduct are formed and without which no society would be feasible (Johansen 1977). In various studies into social preferences, it is seen that they are comprised of multiple aspects. Reciprocity, inequity aversion, altruism and trust are all basic components of this preference set (Andreoni et al. 2002). When kindness or animosity is shown, the impulse exists to reciprocate in like manner. When inequity exists, the urge exists to rebel against it. Altruism is the virtue that depends on no form of expected gain or reciprocity, the purest form of good will. Trust is the confidence in the future actions of another and is arguably the most variable of the social preferences and one that will be revisited in this study. Each of these attributes are far from abstract philosophical concepts, exert great influence on our economic interactions. Agell and Lundberg (1995) discovered that as a result of workers being influenced by fairness and equity customs, wage cuts were often unprofitable, with workers objecting to an unfair action. This can have a direct impact on the extent that a company vertically integrates, with out-sourcing often being far more viable given the reciprocal attitude of workers. Bewley (1999) also noted that a firms policy can affect worker morale and as such companies must take into account the perceived fairness of their policies. The extent of tax evasion has also been correlated to how fair it is perceived, and in fact the entire structure of tax systems are thoroughly debated and altered according to the principles of equity and merit (Seidl and Traub 2002). The perception of unreciprocated generosity has been one of the causes of the general reduction in support from the US w elfare state. People are disinclined to support welfare structures that give the impression that they are helping a poor segment of society that refuse to help themselves, content to live off the goodwill of others (Bowles and Gintis 2000). Fukuyama (1995) also correlates economic prosperity with higher levels of trust, suggesting that social preferences are a very powerful force even in the current global economic system. Sequential games Although the examples given are wide-ranging in scope, involving relatively large economic issues, social preferences have also been proven to have a significant effect on individual interactions. Previously experimental games have been used to prove the dominating forces of self-interest, the equilibria of these experiments being calculated by assuming that all agents were exclusively self-interested (Fehr and Schmict, 2001). Recently, economists have carried out several experiments involving non-cooperative games that contradict this presumption. Guth, Schmittberger and Schwarze (1982) were among the first to create a game that did just this. It is called the Ultimatum Game. There are two players in the game, one a Proposer and one a Responder. The Proposer must divide an amount of money X between the two players, offering the Responder any amount Y = X. If Responder accepts, the Proposer receives the remaining money X – Y, if they reject, both receive nothing. Under self-interested preferences, the efficient equilibrium is the one in which the Proposer gives the least amount possible to the Responder, who will accept any amount. In reality however, offers of less than a fifth of X are rejected about half time and Proposers anticipating this generally offer around 30 to 50 percent of X (Hoffman et al. 1996). This result clearly shows that factors other than self-interest are at play. It would be reasonable to assume that altruism and reciprocity both play a part in the decision-making process of both players. The Proposer may be influenced by a code of morals and a concept of fairness to offer more than the standard equilibrium distribution. The P roposer must also take into account the Responders sense of reciprocity and animosity towards a seemingly unfair distribution. Although the Responder is under no monetary incentive to reject a low offer, yet his social preferences mean that he is able to achieve some utility by spiting the Proposer, thereby valuing a certain amount of reciprocity over monetary value. Given the fact that the Proposers actions may be driven only by the fear of reciprocity and no sense of altruism, it is worthwhile to look into the Dictators Game first introduced by Kahneman et al. (1986) and refined by Forsythe et al. (1994). In this game, the Responder, now called the Recipient, is not given the option to accept or refuse the amount given by the Proposer. If the Proposer is motivated by self-interested alone, they will offer nothing to the Recipient but as many experiments have shown, this is not always the case. Henrich et al. (2001) find that in most dictator game experiments there is a primary mode offer of zero percent of the Proposers total wealth and a secondary mode offer of 50 percent. Some groups show a primary mode offer of 20 percent and a secondary mode of 50 percent providing strong evidence of inequity aversion. In addition to supporting the notion that man is not exclusively self-interested, studies also confirm that fear of reciprocity is present i n the Ultimatum Game and that Proposers apply backwards induction with average offers being lower in the Dictator Game (Roth et al. 1991). The Trust Game, developed by Berg et al. (1995) is a game that can be used to test the presence of altruism, inequity aversion, reciprocity and its namesake, trust. The game is played with an Investor and a Trustee, with the former being given an initial endowment of X and the latter given nothing. The Investor is then able to give any amount Y between 0 and X. The amount the Trustee receives will be tripled, amounting to 3Y. The Trustee is then given the option to give any amount Z between 0 and 3Y back to the Investor thereby making the payoffs of the Investor and the Trustee X – Y + Z and 3Y – Z respectively. The Trustee is under no monetary incentive to return any amount and as such, under strictly self-interested preferences the Investor will predict this and give the Trustee nothing but, as with the Ultimatum and Dictator Games, studies show that many players of the Trust Game deviate from this equilibrium. Berg et al. (1995) find that almost all Investors give so me amount of money to the Trustee and that a substantial number of Trustees return at least the same amount and that a third even returned more than they received. The amount returned also increases with the amount given thus supporting the theory that reciprocity is an integral part of many preference sets. Investors and Trustees are able to display inequity aversion by choosing to give or return amounts that will equalise final payoffs. Trustees can also display altruism by returning anything over and above the amount needed to equalise payoffs. It is interesting to note that there is substantial variation in the amounts given, with no clear average amount entrusted. The variation is not unsurprising, however, given the inherent inconsistency in levels of trust that individuals demonstrate in their interactions with various individuals. In society, trust placed in an individual is dependent on who that individual is or, in other terms, trust placed is dependent on the perceived id entity of the individual in question. Identity Identity, at its most fundamental level, is at the base of all human interaction. For an individual to interact with another, the individual must have a clear concept of both himself and of the other. It is in the consideration of these two concepts that decisions are made. Descartes (1912:167) famously stated †¦I think, therefore I am, and in doing so sparked off the philosophical debate on what truly directs our thoughts and actions. Hume (1888) further develops this by exploring our perception of ourselves, our identity. It was his belief that we can only perceive ourselves, and build our identity, by categorisation in the light of selected characteristics and never perceive our true reality in objective terms. It is out-with the bounds of this study to discuss in depth the sociological and psychological complexities of this topic, yet it is worth-while bringing to light some key concepts to further the understanding of the interactions between this studys participants. An identity is a tool of recognition. It allows us to recognise individuals, categories, groups and types of individuals, Wiley (1994:130). More than this, it is also a tool of categorisation and emotional cues. It implies a conscious awareness by members of a group, some positive or negative emotional feelings towards the characteristics which members of a group perceive themselves as sharing and in which they perceive themselves as differing from others, Mennell (1994:177). Goffman (1968) further expounds these aspects of recognition by dividing identity into three sections: the personal identity, the ego identity and the social identity. The personal identity is the unique identification that each individual possesses to differentiate themselves technically, legally and realistically from all others. The ego identity is a purely subjective observation that is built from a multitude of social experiences and is a sense of ones own particular state and nature. The social identity pr ovides a way of categorising people and connects each person with a set of attributes and characteristics thought to be in keeping with the members of their respective categories. Individuals that possess commonalities in the form of thought, action, nature, experience or lifestyle can all be grouped into various social identities. Examples of social identities are nationality, gender, music-taste, age, profession and political views. It is important to stress that while individuals may only hold one personal and ego identity, they are able to juggle multiple social identities which have varying degrees of focus from situation to situation. Akerlof and Kranton (2000) put forward the theorem that our perception of our ego identity can have a significant influence on our decisions and actions. Their theorem sheds light on a number of seemingly irrational choices. Actions that are of apparent detriment to an individual can be viewed as a form of behaviour that it used to create a more unique self identity. Similarly, steps may be taken to symbolise the assumption of a particular identity or the membership of a certain group, be they conscious or otherwise. Men do not generally wear dresses, and as such this behavioural code is unconsciously subscribed to by the majority of men. Any behaviour to the contrary poses a challenge not merely to the social norm, but to the identity of manhood itself. Attempts to manipulate an individuals decisions can be based on the notion of identity. In order to influence people to buy their products, companies create advertisements that often show a stylised form of a particular identity that people may aspire to. Finally, as identity can play such a large role in determining our economic decisions and behaviour, and assuming that individuals can choose their own identity, Akerlof and Kranton (2000) conclude that identity choices can be a major factor in a persons overall economic well-being, a conclusion strengthened by the theory of role-identities. It is difficult to determine to what extent our identity is prescriptive or descriptive in relation to our own actions, but nevertheless the dual concepts of identity and role are deeply interconnected. Lyman and Scott (1970:136) clarify this link by stating that roles are identities mobilised in a specific situation; whereas role is always situationally specific, identities are trans-situational. By assuming an identity, we also assume a role. Despite that the fact that this role varies from situation to situation, it is at all times consistent with the assumed identity. It is from this notion that expectations and metaperspectives are formed. Laing et al. (1966) pioneered the belief that it is not I but you that is important. More specifically they claimed that we are all deeply influenced by considering our view of others view of ourselves and in such a way develop a role-performance that conforms to the expectation others have of our behaviour so as to receive positive feedback o r avoid negative feedback. In order to assess these expectations and act accordingly, we must first judge what these expectations are. With strangers, this is problematic, and as such we orient ourselves toward them in terms only of the ill-specified contours of their social roles, (McCall and Simmons, 1978:70). In this respect, we are only able to form rough estimations of a persons true identity and thereby rely on our perception of how they fit into vague boundaries of social identities. When we perceive people this way, our perception of the attributes they possess as ascribed by their social identity is often completely arbitrary when viewed in the context of an objective character analysis. The perception and reality can at times be poles apart, decreasing in accuracy with increasing social distance. Identities and Social Preferences Akerlof (1997) defined social distance as a measure of social proximity between individuals. The model he created summarises that people gain benefits from interacting to those socially closer to themselves, with these benefits decreasing with isolation. This model is supported by empirical evidence that suggests that trust and reciprocity are linked with social connection and that members of the same nationality and race exhibit greater degrees of these attributes towards one another (Glaeser et al. 1999). A common method of analysing social distance is through the construction of groups in experiments and many studies of this kind have provided quite significant results. Studying the effects of group membership on cooperation, Orbell et al. (1988) find that subjects are far more likely to cooperate with in-group members than out-group members, with 79% of participants showing cooperation with the former and only 30% showing cooperation with the latter. Through using a variation on the dictator game, Frey and Bohnet (1997) also showed how group membership affects social preferences. The experiment observed that in-group members were allocated far more of the total endowment than out-group members suggesting some correlation with membership and altruism and inequity aversion. An important finding of the literature on the topic of group membership is that subjects react to membership in a very subjective manner, disregarding objective considerations. Billing and Tajfel (1973) observe that the even most minimal connections within a group still give rise to in-group positive discrimination. Although subjects realised that the basis of group composition wa s entirely random, they still discriminated toward their fellow members in a very significant way. The fact that the weakest bonds are able to create positive in-group interaction is an important consideration when examining the relation between perceptions of social identity and expressions of social preferences. While group membership is a powerful force, transnational studies have shown that the cooperation inducing group mentality is not a universally consistent attribute. Buchan, Croson and Johnson (1999) find that subjects from the U.S. are more trusting when paired with in-group members but that this is not the case for subjects from China and Japan, who are more trusting in general, regardless of whom they were paired with. Buchan and Croson (1999) also find variations across genders observing that although participants trust men and women equally, women are seen to reciprocate more than men in Trust Games and are more generous in Dictator Games, findings that are consistent internationally. Another consistency that was found across nationalities in this study was the effect that communication between players had on trust and reciprocation levels, a conclusion also mirrored in other experiments. Roth (1995) found that even simple, seemingly irrelevant conversations significantly increa sed the levels of these social preferences. Regardless of variations across nationality, gender and communication levels, it is apparent that there is a clear connection between identity and social preferences. As we categorise individuals into social categories, we not only presume they possess certain qualities and attributes but we also predict how they react. In the same way we use metaperspectives to shape our own actions based on vague notions of the social identities of others, we also use these imperfect images to form inherently imperfect expectations of future interactions. The perception and reality can at times be irreconcilable and yet any initial interaction uses this as its basis. McCall and Simmons (1978) put forward the idea that any interaction that takes place is solely based on images that are constructed in the minds of those interacting. Taking into account the inaccuracy of these constructs when strangers interact, we can see how this translates into the laymans term of prejudice, a concept closely linke d with trust. The concept of trust, as mentioned earlier is based on confidence and at the heart of confidence is a deep reliance on predictions and expectations which are in turn based on the rough identities that we perceive others to possess. This results in great variance in trust levels which, although proven in studies referred to above, is readily seen in everyday life. Trust can be unquestioned with interactions with family members and friends but displayed with lesser and lesser extents to strangers and those who we perceive as untrustworthy. Just as signalling is used in the employment markets, so it is in our trust-dependant interactions. One may ask a well-dressed, polite and friendly stranger to watch over some personal belongings in a library but may be loath to leave anything unattended when in the presence of hooded youth. The hood can be seen as a signal that the wearer is dangerous and cannot be trusted. It is perceived as the expression of an identity, the perception of which ca n influence our attitudes and behaviour. The studies above also show that identity can greatly affect reciprocity, inequity aversion and altruism. Experiments based around group membership, however minimal, show the great influence groups have on these social preferences. One explanation of this is the concept of metaperspectives, in that individuals are more generous in experimental games because they believe that their counterpart expects them to be. Akerlofs (1997:1008) model of social distance also sheds some light on this by theorising that individuals benefit from lesser amounts of social distance between them and thus have the incentive to conform to expectations, what he labels The Conformist Model. A reduction of social distance between players can also be achieved by perceived acts of kindness and so experimental game players may be willing to sacrifice monetary gains so as to achieve social gains with another player. This incentive however, is again based on social distance and those players who feel socially far apart may feel no need to become socially closer, a feeling that is ultimately merely based on their perception of the current social distance and social identities. Two significant ways in which individuals identify themselves and others is by their nationality and gender. At the outset of mankinds evolution, gender has been a universal divider of the human race, preceding all other identities. Rooted in our biology, gender is the simplest form of classification, but its implications are far more wide-reaching than simple physiology. To the opposite sex, gender implies certain generalised roles, attitudes, commitments, experiences and lifestyles. The source of such clear social stereotypes is only in part biological and many academics are of the belief that behavioural and psychological differences are created and perpetuated by unbalanced power and privilege structures in society (Flax 1990). The amplification of social distance is caused by the notion that qualities are gender specific, with masculinity and femininity being attributes in themselves, and the fact that men and women are commonly associated with their relative positions in both f amily life and work life. Lockheed (1985) supposes that women are conceived as compliant followers and men dominant leaders only because of the common minority and majority balance that is common in social and work situations. The large disparity between the social identity and actual realities of members of the opposite sex provides a good opportunity to explore to what extent interaction is based on unqualified perceptions and to map the effect of variations in this perception. Unlike gender identities, nationalism is a relatively new force in the world (Smith 1995). It can be seen as a group identity that has transcended some cultures, as seen in the ethnically diverse nations such as India and Russia, but divided others as seen in the cases of North and South Korea and the Taiwanese and Chinese separation and is manifested in positive discrimination towards fellow nationals and negative discrimination towards foreigners (Macesich, 1985). Breton (1964:378) notes that governments utilise nationalistic instruments†¦ for the purpose of increasing the share of assets in a given assets in a given territory owned by the nationals of that territory. Breton (1964) also observes that nationalistic redistribution of investment and capital results in a lower rate of return than would be realised if resources were allocated efficiently, an observation that draws parallels with the nature of social preferences on a much larger scale. The practice of promoting thes e nationalistic policies that are not beneficial to certain population segments is centred on the formation of a nation-wide group identity that promotes solidarity in the same way that smaller scale groups do. The membership of these nation-groups is defined according to several commonalities. Members share an economy, a historic territory, myths and memories, a public culture, and a set of legal rights (Smith 1991). What is clear from this definition is the lack of consistent personal characteristics, illustrating that members of a nation-group vary considerably in their social and personal identities. The minimal nature of the nation-group is accepted by many academics, some seeing nationalism as an ironic tool that encourages members to appreciate things that are national for the mere fact that it is national (Breton 1964). Karl Deutsch (1969:3) aptly described a nation as a group of people united by a common error about their ancestry and a common dislike of their neighbours, evoking the notion that national identity is a predominately social construct inaccurately perceived to be connected to common characteristics, descent and preferences. (Smith 1996) stresses that the perception of ones own nationality and that of others is inherently only emotional, implying a subjective disregard for objective considerations that results in large social distances between foreigners and nationals, and smaller social distances between nationals. However erroneous, the very substantial influence nationality exerts can be seen through the stereotypical actions of distrusting of foreigners and supporting fellow country-men, making nationality another excellent candidate identity to examine how variations in perceived identity cause variations in the social preferences displayed. Experimental Design and Implementation It is social identity and its inherently variable quality that is at the heart of this study. It is this studys aim to discover in what way the perception of this identity can affect the extent that social preferences are displayed and whether or not a shift of focus from one form of social identity to another will cause a change in degree of social preferences manifested. Given its ability to expose these preferences, an extension of the Trust Game is used

JetBlue Airways: Starting from Scratch Essay

Before David Neeleman’s non-compete agreement with Southwest Airlines expired, he envisioned the concept of starting a low-fare airline that would combine common sense, innovation, and technology and bring the humanity back into air travel (Gittel & O’Reilly, 2001). In 1998, JetBlue was born. In order for David to fulfill his goal of a â€Å"do-it-right† kind of airline, he needed to recruit superior industry veterans who were willing to start from scratch and place an emphasis on employees and customers. Each of these individuals, from the President, General Counsel, CFO, and the HR director, wanted to create an airline that was fun, had integrity, was safe, and cared for their employees, plus had a passion to get it right (Gittel & O’Reilly, 2001). When JetBlue hired Ann Rhoades away from Southwest Airlines, she brought with her, her experience on how to set up the rules and regulations that JetBlue would use to manage its personnel. During JetBlueâ€⠄¢s beginning operations, they relied upon five core values that were emblematic of the main characteristics of the company (Gittel & O’Reilly, 2001). These values included safety, caring, integrity, fun, and passion. Taking into consideration these five values, JetBlue used the Equal Employment Opportunity (EEO) acts to determine how, where, when, and which employees would join JetBlue as team members. In order for JetBlue to become successful, they needed to abide by the equal employment opportunity laws that formed a structured path that would enable the HR department to defend their decisions legally, if challenged. JetBlue started with high integrity standards and, to this day, continues to sustain these high standards (Gittel & O’Reilly, 2001). When hiring or dealing with personnel issues, some of the EEO acts that JetBlue references on a daily basis include the following: the Equal Pay Act of 1963, the 1972 amendment to that act, the Lilly Ledbetter Fair Pay Act of 2009, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, amended in 1978 and 1986,  the Americans with Disabilities Act of 1 990, the Pregnancy Discrimination Act of 1978, the Americans with Disabilities Act Amendments Act of 2008, the Immigration Reform and Control Act of 1986, the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, the Uniform Services Employment and Reemployment Rights Act of 1994, the Veterans Benefits Improvement Act of 2004, and the Occupational Safety & Health Act of 1970, amended January 1, 2004 (Gittel & O’Reilly, 2001). JetBlue’s main priority is the safety of its passengers and employees. In order for JetBlue to provide safety for all of its employees, they referenced the Occupational Safety & Health Administration (OSHA, 2001) guidelines for general duty that specifically state that the employer needs to provide a safe and healthy environment for the employees to work, free from loud noises, hazards, falling and sharp objects, and containing breathable air. These are a few areas of concern for JetBlue that relate to the well-being of their employees. In addition to the noted areas, their mechanics, ground crew and pilots have received continuous training on wearing ear protection when on the tarmac at the airport. This training also provides for the ground crew to place chocks under the wheels, florescent cones for the perimeters around the plane and information on other safety gear to prevent accidents. The ground crew needs to be able to read, write and be fluent in English in order to pr ocess all safety information regarding their jobs and other areas and peers who work for JetBlue. Mechanics also have strict safety guidelines that they need to adhere to when providing maintenance to the aircraft. The most important guideline is to ground the airplane, so no static electricity will build up and discharge, causing an explosion or damage to the electronics on the plane. Pilots also have a laptop that they do safety checks with on all the systems of the airplane before takeoff (Gittel & O’Reilly, 2001). JetBlue’s HR department tailored each job and its wage and benefit structure to meet the needs of the individual who was hired for a specific job. When the HR department analyzed industry-standard for wages and benefits, they saw a â€Å"one-size-fits-all† attitude toward industry employees, which did not meet their expectations or standards (Gittel & O’Reilly, 2001). JetBlue’s strategy was to listen to their employees, and by judging the reply from their employees to the questions, they set up a customized wage and benefits packag e for each employee, tailored just for him or her. By giving the  employees a choice, this allowed them to be part of the decision-making team and to fulfill a desire from the employee to be heard. The Equal Pay Act of 1963 played a significant role in JetBlue’s structuring of its wages and benefits. This act is to equalize pay between genders at the same location. There are a couple of exceptions. One exception is that different parts of the country have different wages and cost-of-living structures, which is taken into account when hiring, and the wages are adjusted accordingly. Also, within the structure of wages, JetBlue investigated all jobs within the industry and made sure that they paid above the pay grade of each job specification (Gittel & O’Reilly, 2001). When word spread throughout the industry that JetBlue was paying better than the other airlines, most positions had hundreds and sometimes thousands of applicants. When they offered part-time call center reservation help and paid a dollar more per hour than most agencies, their only ad for reservation help provided them with a waiting list of over 2500 applicants. Many people wanted to work for JetBlue, but many would be denied because they were not a perfect fit in regards to the five core values of JetBlue, and some new hires were even let go because they didn’t live up to the values set forth by JetBlue’s management team (Gittel & O’Reilly, 2001). The Fair Treatment for Experienced Pilots Act and the Age Discrimination in Employment Act of 1967, Amended in 1978 and 19 86, are two acts that deal with age. The Fair Treatment for Experienced Pilots Act deals with the retirement age of pilots who fly commercially for all American airlines (Federal Aviation Administration [FAA], 2007). As stated in the act, pilots who fly domestic flights can fly until their 65th birthday. If they are international flight pilots, only one pilot can be up to 65 while the other flight crew member must be below 60 years of age. This law was enacted because so many pilots were reaching retirement age and new pilots were becoming scarce. Congress took it upon themselves to write the Fair Treatment for Experienced Pilots act so that pilots who were close to the retirement age of 60 years old could continue to fly for another five years. This was backed up by medical professionals who stated that there was only a slight risk in health issues by allowing these pilots to continue to fly five more years. JetBlue has instituted a program to train new pilots, making sure that their fleet is continuously running. In the next 10 years, there will be a deficit, about  85,000 airline pilots. JetBlue’s mission for their pilots is extensive training and providing safe and caring service. This act helps JetBlue retain some of their senior pilots and allows them to be diversified over a greater period of time (FAA, 2007). The best external recruitment tool that JetBlue used was selecting pilots who had a high degree of computer knowledge and also fit the conditions of the core values of JetBlue (Gittel & O’Reilly, 2001). A pilot who enjoys his job will tell his other pilot friends, who work for other airlines, about the benefits he received when hired at JetBlue. One of these benefits, was the paid training to learn to fly the Airbus A320, a $30,000 investment on the part of JetBlue to attract skilled and qualified pilots. Most people will not recommend someone unless they are going to be beneficial to the company. An employee does not want someone to tarnish his reputation with the company for referring a person who will not measure up. In the first year, after the hiring of pilots, they had to release 20 from JetBlue due to lack of living the core values (Gittel & O’Reilly, 2001). Most times it is a balancing act on who will actually be a good employee or not. On the one hand you have several pilots that conform to the mission of JetBlue and then you have a few bad apples that must be purged due to the fact they did not live up to each core value: safety, integrity, caring, fun and passion. The benefit to JetBlue are pilots who are willing to do a good job and understands that the ultimate goal is safety. Once a pilot loses his vision of the core values is when JetBlue and the pilot parts company. This could cause a few issues with keeping planes in the air if a majority of pilots were disgruntled with JetBlue (Gittel & O’Reilly, 2001). When JetBlue started to hire their Flight Attendants, the developed three distinct categories for them. One was for college students that only lasted for a year, to gi ve them some experience, fun and travel (Gittel & O’Reilly, 2001). Another was job-sharing, this scenario allowed two people to share a job and would allow them to balance both job and home life equally. Lastly, JetBlue offered regular full-time employment but with a twist. For Flight Attendants who worked less than 70 hours per month they would be paid a dollar more than industry standard, for those who worked more than 70 hours per month would be paid $30 per hour. JetBlue targeted colleges to recruit able bodied college students who were over 21, wanted to travel, have fun, and represented the company’s core values (Gittel &  O’Reilly, 2001). As far as the Flight Attendants, these jobs were just temporary type positions to only last between one and five years. The benefit of this position is what JetBlue would always be rotating new staff to keep the front line employees fresh but also the bad thing about this would be always constantly hiring for Flight Attendants (Gittel & O’Reilly, 2001). One of the best internal recruitment methods that JetBlue has available to itself is the employee database (Gittel & O’Reilly, 2001). This database allows manager s to see the capabilities and also who is qualified for the desired position. The employee database tracks many aspects of an employee’s career within the company such as how many days they were sick, on-time performance, over time, knowledge of the firm and its policies and procedures. Too many promotions from within results and a lack of creativity, this is why you need a balance of 80/20 of people you would promote from within. The 80% of employees would give you exceptional talent, along with 20% who would give you new ideas and the creativity to look outside the box (Gittel & O’Reilly, 2001). Another internal method of recruitment is a physical listing placed on a board in various areas of the company, for instance including a job advertisement on an employee break room bulletin board. One of the best external recruitment methods that JetBlue uses to hire new pilots is employee referrals. Many of the pilots who fly for JetBlue are satisfied and happy because the airline covers the extensive training to fly the A320. Most pilots who are refer red to JetBlue have extensive skills in computers and are comfortable with the laptop and are the best in the field. An employee would not want to refer somebody if they were a poor candidate and have that come back on them (Gittel & O’Reilly, 2001). Virtual job boards (such as Indeed, Hot Jobs, Monster, Career Builder) are another strong external recruitment method used by companies, as is social media, where companies have taken to looking for employees through forms of social media like Facebook and Linkedin. When JetBlue started to hire people they took into consideration the five core values as a guide to make sure that each employee was the right fit for the company (Gittel & O’Reilly, 2001). These core values were used as a template to judge people’s responses for desirable and undesirable behaviors. Pilots were asked to tell of an example where they were to describe a situation where a customer request went against company policy and the way that they  had resolved that issue. When mechanics were interviewed they were asked to think back when they work for another emp loyer where â€Å"integrity† was a factor in their job. One example, was a mechanic who is prepping the plane for an international flight notice that the compliance and safety of the plane was not to standards. Management pressured him to sign off, but ultimately he refused to comply with management’s request to authorize the flight, which delayed the flight. Management fired the mechanic for noncompliance. On the other hand, JetBlue hired this individual for his unwavering integrity (Gittel & O’Reilly, 2001). JetBlue’s goal was a diverse, selected and knowledgeable employee base that would ensure all applicants were the perfect fit before anyone was hired. People from all walks of life wanted to work for JetBlue, this included college students, the average Joe, housewives, professionals, and your everyday person looking for job (Gittel & O’Reilly, 2001). JetBlue’s interviewing criteria was lengthy with multiple interviews. All interviewers had to approve/sign off the job offer to each candidate that passed scrutiny. The main goal in making the potential employees go through this process was to find the employees that were â€Å"not just looking for a place to work† but an employee that wanted to be a part of a company that would recognize them as a person and not just a number. A happy and content employee is an employee who will go above and beyond t he call of duty and are more likely to stay and work for the company for years (Gittel & O’Reilly, 2001). Performance appraisal systems are to help managers/management evaluate how well work was carried out and how it measured up with regards to the corporate goals (Gittel & O’Reilly, 2001). These appraisals give the necessary feedback to managers in a concise way that measures the adaptability, judgment, appearance, and attitude of the employees, team members and/or groups being evaluated, this lends itself to identifying where the successes and gaps of the developed plan needs to be revised. This type of communication, if used properly, can enhance how each manager interacts with a subordinate and how the employee receives beneficial enhancement actions to better improve him/herself on how to achieve the company’s goals (Gittel & O’Reilly, 2001). When setting up the performance appraisal system, there are external and internal factors that can affect the appraisal process. Among these are federal regulations that specifically target nondiscriminatory actions. In one such case, a  company was ruled against, by a federal judge, because there was sufficient evidence that indicated the use of age bias and age-based policies throughout their performance appraisal against a protected age group. Organizations must avoid any appraisal systems that targets a protected group (Gittel & O’Reilly, 2001). Unions are often an external factor in performance appraisal systems. Most unions are set in tradition and stress seniority over any other basis for promotion or pay increase. Union can demand that a union member be promoted or given a pay increase just because he/she was there for so many months or years, not based on the idea that the person was doing his or her job and enhanced the company’s goals. Fortunately, JetBlue gave its employees the opportunity to voice their opinions and be heard, staving off a union formation (Mondy, 2012). Corporate culture is the greatest internal influence for a performance appraisal system. Many corporations find that if they want to attain employee engagement, they must give an employee a voice to effect change within their department or organization. JetBlue has this ability as they are constantly talking with their ground crew, flight attendants, pilots, and service personnel to get feedback on how well each employee in the company is doing to achieve its goal (Mondy, 2012). Many other factors that influence the evaluations of employees are as follows: 1. Leniency error – this is where the evaluator has his own set of values and rules that he assigns to set the standards by which the employee will be judged (Mondy, 2012). 2. Halo/horn error – this is where employees are judged myopically with enhanced performance reviews and horn is just the opposite, where they are judged with a negative performance review and not on their whole work performance (Mondy, 2012). 3. Similarity error – is when in an evaluator imprints his self onto the employees, ma king those employees seem like the evaluator (Mondy, 2012). 4. Low appraiser motivation – this is when an evaluator knows that this will harm the chances for the employee to receive a promotion, so they may give a false appraisal (Mondy, 2012). 5. Central tendency – this is where the evaluator gives medium appraisal’s to all employees and fails to recognize any with exceptional skills (Mondy, 2012). 6. Appraiser discomfort- this happens when a manager has difficulty in executing the appraisal system. Often times, this makes it stressful for him and the employee, and sometimes results in negative feelings toward the  company and manager from the employee’s perspective (Mondy, 2012). 7. Objectivity error – this is where an evaluator rates an employee by personal attributes, such as attitude, appearance, and personality and disregards other performance appraisal factors (Mondy, 2012). 8. Recent behavior bias – this is when an evaluator rates an employee’s behavior in the last couple weeks rather than throughout the year (Mondy, 2012). 9. Manipulation of the evaluation – evaluators control the appraisal system which allows for manipulation of said system (Mondy, 2012). When you take into account the above list of factors on a standard method of evaluation methods, there is more than one way a supervisor, manager or management can deem the employee worthless, berate him/her, praise, and/or not promote or give a raise. JetBlue has eliminated this by setting up a 360-degree feedback evaluation method, where it is not just one person’s responsibility to dictate who or when someone gets a raise, but rather, a group of the employee’s peers, supervisors, management, and sometimes, even customers give their feedback on how to give that person a helping hand, instead of beating them down with criticism (Gittel & O’Reilly, 2001). This system utilizes multiple methods of evaluation such as a rating scale, collaborative, 360 – degree assessment, critical incident, essay, work standards, ranking, forced distribution, behaviorally anchor rating scale, and results-based. These are a few methods that are used to determine how the employ ee integrates with the team. After all surveys or questionnaires are tabulated, they are presented to the appropriate manager or management team. The management team will go over the survey and isolate habits that have formed and put into place systems to enhance constructive ways to bring change to an individual in a positive manner. The purpose of this is to highlight the behaviors needing correction and praise areas that the employee excels in within the team atmosphere (Gittel & O’Reilly, 2001). Performance reviews of yesteryear were usually done by the supervisors in charge of the employees. Today, up to 90% of Fortune 500 companies use some sort of 360-degree feedback evaluation. JetBlue also uses an appraisal process called â€Å"the 320-degree process† which, reflects their fleet of A320 aircraft. JetBlue and other companies that use the 360-degree programs utilize the results for training, conventional applications, succession planning, and professional development (Gittel & O’Reilly, 2001). Eliminating or reducing errors in  the appraisal system was the goal for the 360 ° evaluation. This app raisal system provides a more unilateral assessment of a person’s character, integrity, adaptability, and performance. Also, shifting the evaluation from a manager to a whole group of peers allows for less errors as stated above and also giving the company a better chance of fighting a claim of unfairness, discrimination or any other legal issue that should arise because of an unhappy employee (Gittel & O’Reilly, 2001). The ultimate goal of the 360-degree evaluation method is to give the whole organization (i.e., employee, supervisor, management, customers, peers) a way to give a constructive critique for improvement (Gittel & O’Reilly, 2001). Another advantage to a 360-degree feedback evaluation system are to evaluate employees, managers, supervisors, and administration with surveys or rating cards which are handed out to peers, customers, team members, managers, the employee, and administration. When the evaluations are complete and totaled, the management team evaluates how to help the employee and/or management towards personal or professional growth (Gittel & O’Reilly, 2001) . This places the employee as the key intention of this appraisal. Actually, when both parties go over the evaluations, the employee can see that this process is not about evaluation, is for career and professional development. Bringing forth, an employee who will dedicate to improving his self-worth to the company. For management, this also proves an ideal way for managers to improve training techniques that will foster growth within the individual and organization (Gittel & O’Reilly, 2001). Additionally, this type of feedback method also highlights the areas where the company’s training needs improving or enhancement to provide better solutions to the training for the company’s goals (Gittel & O’Reilly, 2001). When David Neeleman started the process to create JetBlue, he brought on several people that he thought would benefit the company. After, many strategy meetings, they came up with their five main goals: safety, caring, integrity, fun, and passion. In order, for JetBlue, to maintain their five main goals they needed a system that would allow every person in the company to have a voice (Gittel & O’Reilly, 2001). The preliminary management team was concerned about how they were going maintain the fun in the organization, while maintaining a safe and productive atmosphere, along with how to get all the necessary feedback to their questions. Also, they wanted to provide a convenient and  cost-effective way to satisfy their customers as they grew while maintaining the small company feel. When you look at the case study, Ann Rhodes, Executive vice president for people, was in charge of making a values-based culture to attract, develop and maintain a rapid growth achievement in personnel (Gittel & O’Reilly, 2001). The 360-degree feedback evaluation would give the organization the needed tools to set up their training model that would express their goals and allow them to foster change quickly and decisively to achieve this scenario. Mr. Dave Barger, the COO, wanted to create a spirit within the company that was fun for both the crew and customers. His ultimate mission was to focus on the people and to keep the company union free. Ms. Rhodes agreed with Mr. Dave Barger. They set up teams that were fluid instead of having major work rules in place that hampered the communication between management and employees or vice versa (Gittel & O’Reilly, 2001). The ability to pay is the most significant factor when it comes to financial compensation. JetBlue compensates its employees over and above the competitive rate, which attracts highly skilled individuals (Gittel & O’Reilly, 2001). The performance of an employee is a factor in compensation. If an employee does well and is motivated, this will be noticed by his employer. Resulting in better compensation (Gittel & O’Reilly, 2001). Most companies are looking for experience this too is another factor in compensation. Experience gives the necessary tools to senior employees to handle difficult situations with leadership and performance. Many executives do not need tr aining and can meld into the job and hit the ground running (Gittel & O’Reilly, 2001). Many companies hire young, ambitious employees with potential. Potential is another factor. They determine how much compensation is warranted by the perceived potential represented by the individual (Gittel & O’Reilly, 2001). Today, most companies are looking for employees with seniority. Seniority is a key factor in financial compensation. The longer the employee is on the job, the more salary he or she receives a handsome salary and benefits package. This is due to the ability to multi-task within the organization (Gittel & O’Reilly, 2001). Job requirements are a factor for compensation. A job that requires specific skills, that happen to be risky or hazardous and have tremendous responsibility, will heighten the wages of the job (Gittel & O’Reilly, 2001). As organizational strategy, JetBlue excelled at this  factor for compensation. JetBlue wanted rapid growth and also set higher wages than their competitors (Gittel & O’Reilly, 2001). Discretionary benefits are a deemed gift from the company to the employee. One of these benefits is paid vacations. Vacations from a job, help rest and reinvigorate the crew members and employee so their production does not waiver (Gittel & O’Reilly, 2001). A growing number of companies have grouped sick time, vacation, and personal days together to form what is known as paid time off (PTO). This is a simpler way of keeping track and helping streamline the administration of days off and eliminates most of the excuses people give to get out of work. This benefit is highly praised by employees (Gittel & O’Reilly, 2001). On-site healthcare is becoming popular with many employers to help reduce healthcare costs (Gittel & O’Reilly, 2001). On-site healthcare provides assistance with minor illnesses, injuries, physical therapy, vaccinations, and follow-up care. When employers provide these types of clinics, they it helps to eliminate trips to the emergency room or the doctor’s office which can cost considerably higher (Gittel & Oâ€℠¢Reilly, 2001). Many companies see a great benefit with these on-site healthcare clinics because after implementation, the return on investment is approximately 2.5 to 1 on cost savings (Gittel & O’Reilly, 2001). Dental and vision care have recently become popular as a discretionary employee benefit. Most employers pay for this benefit with maybe a deductible paid by the employee. Employers believe that if their employees have a nice smiling face and eyes they can see out of, they will be happier employees (Gittel & O’Reilly, 2001). JetBlue’s goal was to listen to the employees regarding what type of benefits they wanted and never to say no. JetBlue either met or exceeded the industry standard when it came to discretionary benefits (Gittel & O’Reilly, 2001). Most full-time employees received the following benefits: medical, 401k, profit sharing, double time pay for holidays, and personal time off. Many of the flight attendants received medical coverage plus an additional $500 in pay to help compensate for living in NY. Pilots, dispatchers and technicians were provided with stock options. Pilots got paid training benefits and laptops for checking documents for the certification to fly the A320 Airbus (Gittel & O’Reilly, 2001). Customer Service agents and ground  crew were paid a dollar more than any other crew at their airport and shift differentials. Many part-time employees received the following benefits: medical, 401K, profit-sharing and double pay if they worked holidays. All benefits started from day one because Ms. Rhodes felt that a probationary period was demeaning to the employee (Gittel & O’Reilly, 2001). References Mondy, R.W. (2012). Human resource management. Upper Saddle River, NJ: Prentice Hall. Gittell, J.H., & O’Reilly, C. (2001). JetBlue airways: starting from scratch [PDF]. Retrieved from http://people.westminstercollege.edu/faculty/mkoerner/00_courses/mba_650_spr_06/jetblue_airways_starting_from_scratch.pdf Occupation Safety and Health Administration. (2001). OSH Act of 1970. Retrieved from https://www.osha.gov/pls/oshaweb/owasrch.search_form?p_doc_type=OSHACT&p_toc_level=0 Federal Aviation Administration. (2007). FAA Fair Treatment for Experienced Pilots Act. Retrieved from https://www.faa.gov/news/press_releases/news_story.cfm?newsId=10072

Four Business Types – Pros and Cons

In my opinion, Corporation is the best form suited to venture as intended by Victoria & Quentin because it is separate legal entity distinct from its owners & have well defined registered by laws. These organizations are highly regulated & attract capital even from outside source very easily & existed infinitely. The main issues concerning the Intellectual property rights in providing licensing Marvel's intellectual property to Universal studios are Copyright and Trademark protections to the theme parks which Disney proposed to develop by using Thor, The Hulk, Iron man etc. Law related to copy rights gives the author or creator of work the exclusive rights for limited time span in order to promote creativity & allow control over use of artistic creations. Authors have been given powers to manage the characters (like The Hulk, Iron Man etc) as created by them & any one copying it definitely attract legal provisions (Chapter 17 of the United States Code). However there is the right of public to benefit from the authors work but that too exist on supposition that once copyrightable work enters public domain, others should be allowed to benefit from it and can make make it better for the excellence of all. Where Copyright law protect original writings of an author & dealt with character development and individualization protection trademark laws actually take care trademarks commercial value & designed to safeguard endures against confusion as to source or authorization of an item. Therefore trademark owner has given control over use of the sign or mark in association with those goods and services for which mark symbolizes. The Securities Act of 1933 which originally introduced on account of economic crisis of 1929 and mainly focus on two main objectives: First, to ensure more transparency in financial statements so as to facilitate investors to take informed decisions and second, to establish stringent laws to curb fraudulent activities/misrepresentation in securities markets. Whereas the Securities Exchange Act of 1934 derived to provide for governance of securities transactions in secondary market & to regulate stock exchanges and intermediaries (broker-dealers) to protect public investments. The main purpose of Securities Act of 1933 was to maximize the disclosure of financial through the detailed process of registration of securities. In case investor suffers losses on account of misleading information, they have recovery rights on proving that losses arises due to incomplete or inaccurate information. Whereas by means of Securities Act of 1933, Securities and Exchange Commission (SEC) was created which has broad powers & authority over all aspects of the securities market inclusive of brokerage firms, transfer agents, and clearing agencies and even nation's securities self regulatory organizations (like New York Stock Exchange, the NASDAQ Stock Market, Chicago Board of Options, Financial Industry Regulatory Authority etc). This act also provides the Commission with disciplinary powers over various regulated entities and persons associated with them & include provisions for periodic reporting of certain information by companies whose shares are publicly traded. A company planning for an IPO must appoint a lead manager (book runner) who helps to determine appropriate price of shares to be issued, which can be done by either of the two methods i. e. ither through lead managers or through analysis of confidential investor demand data, which is to be compiled by the book runner known as book building process. IPO requires effective planning comprising of development of an impressive management and professional team, significant growth of company's business so have known public marketplace, available audited financial statements following Internationally accepted accounting principles, compliance's of various act, good corporate governance practices etc. Victoria & Quentin fund raise not amount to IPO but a private placement/funding in which funds can be raised not directly from public but through private investors/ merchant bankers or private equity firms on which minimum regulations are applicable & statutory provisions of an IPO are not applicable. Patent: Patent protects an invention which is novel, useful, and non-obvious. Whereas invention refers to any new article, new machine, or any process or combination thereof or any new use developed by human being but that invention must not form part of public domain nd not previously known in the public before invented. It must be new. Also that invention must be non obvious to person skilled in art. Copyright: Copyrights usually protect the works of an author like writings, music, artistic work or art work which can be expressed in tangible form. It generally gives protection to software, web, course materials, publications, electronically or non electronically, printed or non printed. Trade Mark: Trademarks gives protection to the words, names, marks, symbols, or colors etc. hich differentiate between the goods and services and direct to the source of those goods or services. Trademarks can be renewed forever to the extent they can be Trade Secret: A trade secret is an information which the organizations generally keep secret or undisclosed so as to give them advantage on their opponents/competitors. In the given instances, there is an infringement claim of patent which is design with respect to chip clip for multiple bags of potato chips & another is an infringement of Copyright & trademark when to use the words â€Å"Astroclaw†Ã¢â‚¬  similar to â€Å"Atomic Claw†. In order to make case their effective Victoria & Quentin must prove that, there is no infringement of Intellectual Property rights. They can give evidence to prove that the designs & music has already been created by them as new without copying and their claims & application filed by Gunnar & Alexander fails to serve the test of patentability. Shareholders defined as individuals or artificial legal person who issued stock/shares in a company with a view to get benefit with the hope of earning of profits by company. It is a sort of investment in ownership of company and get rights to the extent of their investment. Whereas stakeholders are the persons who impacted by the policies, rule, regulations & working of an organization. This is the broad term comprises of whom an organization directly or indirectly associated with. It referred to as somebody who has stake or interest in actions of the company at large or even small scale. This term in connection with a corporation consists of its staff, employees, customers, supplier, vendors, dealers & society in wider context. This is the term generated out of need of suitable corporate governance as well as part of corporate social responsibility. Shareholder owes fiduciary duties to minority shareholders as well as to other stakeholders comprising of society at large, means they must act in their self interest so as to maximize their profits by following corporate governance principles. I support Mr. Garfield as he is the supporter of new ideas of capitalism & believes in restructuring & revival mechanism of capitalism. He believes that instead of running a failing or loss making business, shareholders should accept beneficial proposal so as to evade compulsory winding up which impacted other business. He appears to be an ethical person when denied to take money from a widow. On the other hand, Mr. Andrew seems to be sympathetic towards employees, workers but actually he not grown up as manger & not taken any action to replace discard technology & owing to above reasons I vote in favor of Mr. Garfield as the organization runs to make profits & if an organization not works well, it must be restructured in a manner so as to maximize wealth of shareholders.