Working Paper: NBER ID: w17066
Authors: Daron Acemoglu; Matthew O. Jackson
Abstract: We study the evolution of the social norm of "cooperation" in a dynamic environment. Each agent lives for two periods and interacts with agents from the previous and next generations via a coordination game. Social norms emerge as patterns of behavior that are stable in part due to agents' interpretations of private information about the past, which are influenced by occasional past behaviors that are commonly observed. We first characterize the (extreme) cases under which history completely drives equilibrium play, leading to a social norm of high or low cooperation. In intermediate cases, the impact of history is potentially countered by occasional "prominent" agents, whose actions are visible by all future agents, and who can leverage their greater visibility to influence expectations of future agents and overturn social norms of low cooperation. We also show that in equilibria not completely driven by history, there is a pattern of "reversion" whereby play starting with high (low) cooperation reverts toward lower (higher) cooperation.
Keywords: Social Norms; Cooperation; Leadership; Expectations; History
JEL Codes: C72; C73; D7; P16; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| historical actions (B15) | current expectations (D84) |
| prominent agents' actions (L85) | changes in social norms (Z13) |
| prominent agents (L85) | influence future agents' expectations (D84) |
| high cooperation (C71) | low cooperation (C71) |
| prominent agents (L85) | shift from low to high social norm (Z13) |
| historical play (N23) | current behavior (D19) |