Studies on Culture and Social Norms IV

Rabin (1993) notices reciprocity is a common phenomenon in human interactions. In order to model reciprocity, he uses psychological game theory, incorporate beliefs and intentions into people’s preferences. In this model, people’s intentions are reflected by the action they take. But for situations like the dictator games where there is only one decision maker, the model is inadequate as we don’t have a measure on the other person’s intentions. A more generalized model proposed by Charness and Rabin (2002), even though incorporates social welfare concern, inequality aversion and reciprocity, is still not capable of explaining the above experimental results, because none of these components can explain the fact that people exploit moral wiggle room to behave selfishly.

The inadequacy of current theories on other-regarding preferences implies the importance to incorporate social norms into individuals’ preferences. Bicchieri (2005) is among the first that propose a norm-based utility function. The utility function she proposed has two parts: the monetary payoff and the norm-related utility. A social norm in her model is defined as one prescribed action in a situation, and disutility results when the agent violates the norm. The disutility is related to the reduction in others’ payoffs caused by this violation.

While this model provides better explanation for the above experiments compared to other models with prosocial preferences, it does not consider the case where multiple actions are equally appropriate, and its definition of norms makes it incapable in explaining results from experiments such as the multi-player dictator game studied by Dana et al. (2007).

Krupka and Weber (2013) propose a more refined definition of norms. Instead of defining a single appropriate action prescribed by the norm in a situation, they consider each action has some level of social appropriateness. They design a coordination game to elicit and quantify social norms. In their norm elicitation game, the subjects are asked to rate "social appropriateness” of an action in a specific situation on a scale of 4. The subjects get rewarded if their ratings are the same as the modal rating of the group. Using the elicited norms, Krupka and Weber analyzed the experimental results of various games, including famous games studies by other authors (List, 2007; Dana et al., 2006, 2007; Lazer and Pentland, 2009). Their experimental results show that social norms can provide a good prediction of individual decision making, and
subjects have a stable willingness to sacrifice money and take socially appropriate actions. Their research contributes to the endeavor to develop a theoretical model of social norms.