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Our study explores the effects of induced group identity on effort provision in a competitive framework. We implement a laboratory experiment that allows disentangling internalized social norms from peer-pressure and fear of retaliation by in-group members. First, we isolate the impact of social identity on individual decision by varying the presence of group identity. Second, we implement peer-pressure by varying the level of monitoring from group members. We find that the presence of induced identity, even in the absence of peer-pressure, has a significant impact on individual decision. Participants tend to exert larger effort when matched with in-group members and opposed to out-group members. Allowing in-group members to observe one's decision of effort increases the impact of group identity. In this context, we also observe that individuals performing with out-group members against in-group members, tend to lower their effort. However, the introduction of costly punishment has an opposite effect, and tend to lower the impact of group identity on effort decision. We also find evidence of gender differences in the response to the introduction of group identity.
