Social norms and social choice

Abstract

Experiments can provide rich information on behavior conditional on the institutional rules of the game being imposed by the experimenter. We consider what happens when the subjects are allowed to choose the institution through a simple social choice procedure. Our case study is a setting in which sanctions may or may not be allowed to encourage “righteous behavior.” Laboratory experiments show that some subjects in public goods environments employ costly sanctions against other subjects in order to enforce what appears to be a social norm of contribution. We show that such an artificial society would not be an attractive place to live in, by standard social choice criteria. If such societies came about because of evolutionary forces, as speculated in the literature, then we argue that The Blind Watchmaker was having one of his many bad days at the workbench. In fact, none of our laboratory societies with perfect strangers matching ever chose to live in such a world. Our findings suggest that the conditions under which a group or a society would choose a constitution that is based on voluntary costly sanctions are very special. More fundamentally, they demonstrate the importance of naturally endogenizing the choice of institution if one is to make reliable inferences about treatment effects from different institutions.