WP 2021-05 Modeling Norm-Governed Communities with Conditional Games: Sociological Game-Determination and Economic Equilibria

AUTHORS: Don Ross, Wynn C. Stirling and Luca Tummolini

ABSTRACT: Most social scientists agree that informal norms constrain available equilibria in most human interactions. However, they do not agree on how to model them: economists often make them derivative of individual preferences, while a broader tradition in social theory understands them as exogenous social facts. Non-cooperative game theory more naturally accommodates the economists’ approach. However, attention is increasingly attracted to recent work by economists who appreciate that the broader understanding may be important for full empirical adequacy. We focus on how game theorists might track this emerging shift. Extending Stirling’s previously developed Conditional Game Theory, we model macrostructural processes of norm evolution through social influence diffusion in a way that relies on no exotic solution concepts, which in turn allows norms as social facts and norms as expressions of preferences to be modeled as evaluable complements, by analogy to the complementarity of cooperative and non-cooperative game solutions under the Nash program. The result can be understood as a way of specifying mutual constraints between economic models in which normative attitudes are exogenous, and sociological models that represent such attitudes as endogenous under power relationships and ontologies of social roles.