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Different Kinds of norms

This lecture talked about how different kinds of norms shape people’s behavior in the real world.

Rationality limiting Norm

Example: Stealing Wallet from your classmates.

It is a social norm that you would never, or even not thinking of stealing wallets from your classmates. You know that if you got caught, you will be severely punished thus your rationality limits you from stealing from others.

Preference changing Norm

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Equilibrium selection Norm

Example: directions of car driving on the road.

In this situation, there are only two equilibrium: either all people drive on the left or on the right, or there will be car accidents that creates negative payoffs. Thus, the set of equilibrium structured the current social norm that people drive on the same side.

Punctuality in a society

Who benefits if there exists both punctual and unpunctual person?

Example: A meeting.
What is non-punctual? Having an chance of p (0<p<1) being late B (B>0) minutes
Cost of being punctual: C

Payoff	Punctual	Non-P
P	B-C	pB-C
N	pB	p2B

Notice that under conventional situation {P,P} and {N,N} are the equilibria.

Evolution of Punctuality

Bad norms will perish due to their inefficiency
Consider the society of P and Q, we can say P is immune against Q if Payoff (P,P) > Payoff (P, Q) or Payoff (P,P) = Payoff (P,Q) and Payoff (P,Q) > Payoff (Q,Q). That is, over longtime Q will perish due to the consistent advantage gained by P.