How cooperation evolves: History, expectations, and leadership

Great short article by the top author in the field of development economics:

Though much existing research on these issues emphasises the "cultural" origins of social norms including differences in the extent of trust between different societies or different parts of the same nation, social norms are not cast in stone and do change.

Locke (2002), for instance, provides examples both from the south of Italy and the northeast of Brazil, where starting from conditions similar to those emphasised by Banfield in the south of Italy, trust and cooperation appear to have emerged. 

A very long period of lack of collective action led many commentators and social scientists to conclude that collective political action, particularly in favour of democracy, were inconsistent with the cultural values of the Middle East. Yet, many countries in the region are now in the midst of highly coordinated protests and associated changes in social norms of political participation.

 Leadership is the key:

Knowing that the visibility of their behaviour can shape future expectations and behaviours, prominent agents can have strong incentives to deliberately break an unfavourable social norm and switch society towards a more cooperative one. This analysis thus provides a working model of leadership.

In addition to leadership by prominent agents, social norms can also be affected by policies that encourage more cooperative behaviour. Such policies can be particularly effective if commonly understood and believed, as in this case they change not only incentives but also expectations. One example is a publicly announced amnesty that forgives past bad behaviour, thus encouraging a switch towards more cooperative behaviour in the future. Such an amnesty, like the truth and reconciliation commissions that are sometimes used to erase (or at least ameliorate) the effects of past of processes in many countries, can only work if it is widely understood and believed, so that the agents adjust their expectations about others' behaviour in light of the amnesty.

We had a post on Acemoglu's article which is the basis of his article here.