Social norms and cooperation

• Date: 01 December 2018
• Author: Bryan C. McCannon
• DOI: http://doi.org/10.1111/ijet.12160
• Published date: 01 December 2018

doi: 10.1111/ijet.12160

Social norms and cooperation

Bryan C. McCannon∗

A theoretical framework is introduced to model social norms using the tools of psychological

game theory. In the prisoner’s dilemma game, a preference for norm compliance can lead to

cooperation arising with a positive probability,and if this preference is sufficiently strong, occur-

ring as a pure strategy equilibrium. Thus, cooperation can arise as a social norm in a one-shot

prisoner’s dilemma game without repeated play,communication, or sanctions.

Key wor ds cooperation, norm compliance, prisoner’s dilemma, psychological game theory,

social norm

JEL classification D84, D03, C72

Accepted 2 June2017

1 Introduction

An emerging literature in experimental economics has developed, highlighting the role of social

norms in strategic decision-making. As formalized by Bicchieri (2006), a social norm arises when

(a) players have beliefs about what the other player(s)w ill do and (b) contingentlycomply w ith that

norm, that is, they gain from norm compliance (or rather,lose from violating the norm). Exper imen-

tal evidence has shown that social norms explain behavior well in a number of environments such

as altruistic giving in the dictator game (Bicchieri and Xiao 2009; Erkut et al. 2015), punishment in

the public goods game (Carpenter and Matthews 2009), reciprocity in the trust game (Bicchieri et al.

2011), extraction in a common resource game (DeAngelo et al. 2017), and profitable punishment

(Xiao 2013), to name a few.

While the experimental results are well documented, a theoretical framework has not been

developed. In this note I apply the tools of psychological game theory (Geanakoplos et al. 1989)to

provide a model of social norm compliance. Traditional game-theoretic models presume that utility

depends on actions. Psychologicalgame theor y extendsthe field by considering scenarios where utility

depends on beliefs about both actions and beliefs (Dufwenberg 2006). A player with psychological

preferencesgains from the direct payoff from the game, but also, for example, his assessment regarding

others’ beliefs about his choices. By having utility defined on actions, rather than solely on outcomes,

motivations not previously appreciated can be studied.

There are some examples of applying psychological game theory. Charness and Dufwenberg

(2006) use the framework to explain the making of promises in an experiment. Dufwenberg et al.

(2011) use it to model guilt aversion and provide evidence in experiments of public goods games.

McCannon (2015) uses a framework of psychological games to explain leadership and differing

levels of contributions in sequential- versus simultaneous-move public goods games. Theoretical

∗Department of Economics, West Virginia University, Morgantown, West Virginia, USA. Email: bryan.c.mccannon@

gmail.com

International Journal of Economic Theory 14 (2018) 303–307 © IAET 303

International Journal of Economic Theory