On the Evolution of Norms in Strategic Environments

Abstract

In a heterogeneous population divided into two cultural groups, we investigate the intergenerational dynamics of norms, modeled as preferences over actions, as depending on strategic environments. We find that environments with strategic complementarity or substitutability lead to different long-run norms and horizontal socializations. When players face many games within the same class, under complementarity agents converge to the same norm and socialization is high, under substitutability norms may diverge or become neutral and socialization is low. However, for specific games, partial convergence can arise under complementarity, providing an explanation to cultural heterogeneity, and partial divergence can arise under substitutability.

Keywords: Evolution of Norms, Cultural Transmission, Endogenous preferences, Cultural Heterogeneity

JEL Classification: C7, D9, I20, J15, Z1