economics of own actions and externalities. Hence, the proposed representation ofidentity is
A person j‟s identity Ij depends on
j‟s assigned social categories cj
the extend to which j‟s own given characteristics j match the ideal of j‟s assigned
category indicated by the prescription P iii. the extend to which j‟s own and others‟ actions correspond to prescribed behaviour indicated by P. With this model constructed, Akerlof and Krantor (2000) experimented with a game theory analysis to understand the economic interaction where identity is based on social difference.
The theoretical framework adopted in this study follows mainly the acculturation and culture conflict perspectives. Following Akerlof and Krantor (2000) the identity function takes the form of equation (2) transformed into Logit model. According to Hair et. al. (1995), one of the advantages of a Logit model is that it allows the estimation of probability estimates of an event occurring. The Logit model is therefore appropriate and can be used in estimating the socio economic elements, which influence identity in this research.
A typical cross-section binary response model with the error term following a logistic distribution is
are the independent These are the socio economic factors that lead to the
formation of actions, own
ethnic identity characteristics
(including individual‟s actions, others‟ and common factor in community i.e.
is a parameter vector
is an error term independent of
for an unknown positive constant
are observed and iid.