The Great Illusion: Ignorance, Informational Cascades, and the Persistence of Unpopular Norms

Abstract

Norms of discrimination against women and blacks, norms of revenge still alive in some Mediterranean countries, and norms that everybody dislikes and tries to circumvent, such as the invisible norms of reciprocity that hold among the Iks studied by Turnbull, are all examples of unpopular and inefficient norms that often persist in spite of their being disliked as well as being obviously inefficient from a social or economic viewpoint. The world of business is not immune to this problem. In all those countries in which corruption is endemic, bribing public officials to get lucrative contracts is the norm, but it is often true that such a norm is disliked by many, and that it may lead to highly inefficient social outcomes (Bicchieri and Rovelli 1995).From a functionalist viewpoint such norms are anomalous, since they do not seem to fulfill any beneficial role for society at large or even for the social groups involved in sustaining the norm. In many cases it would be possible to gain in efficiency by eliminating, say, norms of racial discrimination, in that it would be possible to increase the well-being of a racial minority without harming the rest of society. To social scientists who equate persistence with efficiency, the permanence of inefficient norms thus presents an anomaly. They rest their case on two claims: when a norm is inefficient, sooner or later this fact will become evident. And evidence of inefficiency will induce quick changes in the individual choices that sustain the norm. That is, no opportunity for social improvement remains unexploited for long. Unfortunately, all too often this is not the case, and this is not because people mistakenly believe inefficient norms to be good or efficient.

Time Lag and Communication in Changing Unpopular Norms

“…Knowing that the majority will commit to the alternative norm in the present may lead to a change of the current norm if everyone is aware that the outcome of that change will be experienced immediately rather than after a time lag. For example, in the case of corruption norms, Bicchieri and Fukui [5] argue that more information dissemination on the true beliefs of businesspeople (i.e., condemning corruption) will lead to the change of such an unpopular norm. We add to this argument that such change may occur because, in that example, the consequences for businesspeople to operate in a ‘clean’ and fair business environment are close in time to their decision to commit to the alternative norm.…”

“…There is, however, substantial evidence of norms that harm those who comply. Examples are norms on footbinding in China [4], female circumcision in Africa [4], bribery and corruption in various cultures [5], the mass suicide of Jim Jones’ sect when it was threatened in Guyana [6], and the easy access to and possession of guns in the United States. Although a majority of individuals may disapprove of such norms when asked individually, the pertaining group collectively conforms to them.…”

“…These include (i) a lack of or inaccurate information in uncertain situations, leading people to copy the behavior of others, even if doing so goes against their own beliefs and preferences, which is referred to as herd behavior [7, 8]; (ii) a misinterpretation of others’ beliefs about how to behave in a certain situation, leading to a suppression of one’s own beliefs and a tendency to copy the majority, which is labeled pluralistic ignorance [5, 9]; and (iii) not only adhering to the norm but also enforcing it to signal dedication to the norm despite privately questioning it, which is known as false enforcement [6, 10]. The first two explanations imply that the provision of more accurate information would suffice to diminish the commitment to unpopular norms.…”

Conditions for the Emergence of Shared Norms in Populations with Incompatible Preferences

“…It is possible that unpopular norms are established, which are not aligned with the preferences of the majority [77], [90]–[91].…”

Infostorms

“…In the example above it was mentioned that agent 2 could deduce the left signal of agent 1 and, given that 2 received a right signal, he should invoke a tie‐breaking rule in order to decide what choice to make. Examples of such tie‐breaking rules may be to randomize the available option (Bicchieri and Fukui ; Bikchandani et al. 1992), choose an externally given option (Banerjee ; Bikchandani, Hirshleifer, and Welch 1992), act in accordance with a private signal/preference (Anderson and Holt ; Banerjee ; Bicchieri and Fukui ), or something else.…”