ABSTRACT
The importance of identity in economic theory can be best explained by the role of types of players in achieving optimal solutions in strategic interaction. The game of identity builds on capacities that evolve in the game of life, and it fixes the types of players in the strategic game. Language allows for the narrative construction of identities, which means that an identity is actually a history told in a community of language users. The George A. Akerlof and Rachel E. Kranton model explains revealed preferences as directly expressing a choice of social identities, so it explains where in the social space an individual is located. However, the argument from group selection relies on mechanisms of group boundaries, which cannot themselves have a genetic basis, given the observed plasticity of human beings, especially with regard to culture. Therefore, evolution can only foster the emergence of the capacity for forming identities, but not the identities themselves.
