Indignation and the Evolution of Cooperation Norms

Abstract

Sociologists and psychologists have long argued that emotions are essential to sustain social norms. This study examines the role of indignation in upholding cooperation norms within society. I model indignation in a population psychological game and characterize the stochastically stable equilibrium in a noisy best-reply dynamic. The analysis yields two findings. First, indignation sustains cooperation in the long run, irrespective of whether interactions are global or occur within a fixed local interaction structure. Second, mobility between communities fosters the emergence, expansion, and persistence of cooperative communities, leading to positive correlations among mobility, community size, cooperation, and the punishment of defectors. This study demonstrates the application of stochastic stability analysis to address multiple equilibria in psychological games.

Keywords: Social norms, cooperation, costly punishment, stochastic dynamics, stochastic stability, psychological game

JEL Classification: C73, D63, H41