The paper presents a simulation of the dynamics of impersonal trust. It shows how a “trust and reciprocate” norm can emerge and stabilize in populations of conditional cooperators. The norm, or behavioral regularity, is not to be identified with a single strategy. It is instead supported by several conditional strategies that vary in the frequency and intensity of sanctions.

This article shows that social norms are better explained as correlating devices for a correlated equilibrium of the underlying stage game, rather than Nash equilibria. Whereas the epistemological requirements for rational agents playing Nash equilibria are very stringent and usually implausible, the requirements for a correlated equilibrium amount to the existence of common priors, which we interpret as induced by the cultural system of the society in question. When the correlating device has perfect information, we need in addition only to (...) posit that individuals obey the social norm when it is costless to do so. When the correlating device has incomplete information, the operation of the social norm requires that individuals have a predisposition to follow the norm even when this is costly. The latter case explains why social norms are associated with other-regarding preferences and provides a basis for analyzing honesty and corruption. (shrink)

In this article, we aim to illustrate evolutionary explanations for the emergence of framing effects, discussed in detail in Cristina Bicchieri’s The Grammar of Society . We show how framing effects might evolve which coalesce two economically distinct interactions into a single one, leading to apparently irrational behavior in each individual interaction. Here we consider the now well-known example of the ultimatum game, and show how this ‘irrational’ behavior might result from a single norm which governs behavior in multiple games. (...) We also show how framing effects might result in radically different play in strategically identical situations. We consider the Hawk-Dove game (the game of chicken) and also the Nash bargaining game. Here arbitrary tags or signals might result in one party doing better than another. (shrink)

In The Grammar of Society, Bicchieri maintains that behavior in the Ultimatum game (and related economic games) depends on people’s allegiance to ‘social norms’. In this article, I follow Bicchieri in maintaining that an adequate account of people’s behavior in such games must make appeal to norms, including a norm of equal division; I depart from Bicchieri in maintaining that at least part of the population desires to follow such norms even when they do not expect others to follow them. (...) This generates a puzzle, however: why do norms of equal division have such cultural resilience? One possibility is that our natural emotional propensity for envy makes norms of equal division emotionally appealing. An alternative (but complementary) possibility is that deviations from a norm of equal division would naturally be interpreted as threats to status, which would facilitate the moralization of such norms. (shrink)

The paper presents a simulation of the dynamics of impersonal trust. It shows how a "trust and reciprocate" norm can emerge and stabilize in populations of conditional cooperators. The norm, or behavioral regularity, is not to be identified with a single strategy. It is instead supported by several conditional strategies that vary in the frequency and intensity of sanctions.