Evolution and Interaction of Social Norms

We use the framework of random matching games and develop a two society model to analyze the interaction of societies with different social norms. Each agent repeatedly faces two different coordination games. A social norm of a society is a mode of behavior --strategy--which is adopted by a majority of agents in the society. There are many equilibria in this world. In addition to those equilibria in which two societies adopt the same social norm, there are other equilibria in which two countries adopt different social norms. The regions of existence of each of these equilibria will be characterized in terms of the relative size and the degree of integration of the two societies. We apply evolutionary approach to this world to see what happens if the two societies are integrated over time. If the two societies begin with "distinctly different" social norms, people in the smaller society are more likely to adjust their behavior than those in the larger society as the two societies are integrated. When the process of intergration proceeds further, the social norm of the smaller society if absorbed into the social norm of the larger one if the former is too small. If the two societies are similar size, however, the integration results in an "eclectic" norm where agents in both societies adjust their behavior toward each other. It is shown that the "eclectic" norm leads to Pareto improvement. On the other hand, whether size of the societies, and therefore, the smaller society whose norm disappears is worse off if its original norm is superior to that of the larger society. Some extensions, including endogenous matching technology, policy issues, and a possibility of discriminatory behavior, are also examined.