History, Expectations, and Leadership in Evolution of Social Norms

Abstract:     
We study the evolution of a 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, influenced by occasional commonly-observed past behaviors. For sufficiently backward-looking societies, history completely drives equilibrium play, leading to a social norm of high or low cooperation. In more forward-looking societies, there is a pattern of `reversion' whereby play starting with high (low) cooperation reverts toward lower (higher) cooperation. The impact of history can be 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.

Number of Pages in PDF File: 64

Keywords: cooperation, coordination, expectations, history, leadership, overlapping generations, repeated games, social norms

JEL Classification: C72, C73, D7, P16, Z1

working papers series