Working Paper: CEPR ID: DP6534
Authors: Guido Tabellini
Abstract: What explains the range of situations in which individuals cooperate? This paper studies a theoretical model where individuals respond to incentives but are also influenced by norms of good conduct inherited from earlier generations. Parents rationally choose what values to transmit to their offspring, and this choice is influenced by the quality of external enforcement and the pattern of likely future transactions. The equilibrium displays strategic complementarities between values and current behaviour, which reinforce the effects of changes in the external environment. Values evolve gradually over time, and if the quality of external enforcement is chosen under majority rule, there is hysteresis: adverse initial conditions may lead to a unique equilibrium path where external enforcement remains weak and individual values discourage cooperation.
Keywords: cooperation; cultural transmission; culture; institutions
JEL Codes: A10; A14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| material incentives + inherited norms of good conduct (A13) | individuals' cooperation (D70) |
| parental values (J12) | children's behaviors (J13) |
| strategic complementarities (adoption of norms of generalized morality) (F55) | likelihood of cooperation (C71) |
| quality of external enforcement (K40) | evolution of values (A13) |
| quality of external enforcement (K40) | likelihood of cooperation (C71) |
| changes in the external environment (improved enforcement) (K40) | scope of cooperation (F55) |