Norms and Bounded Rationality

Abstract
Anthropologists believe that human behavior is governed by culturally transmitted norms, and that such norms contain accumulated wisdom that allows people to behave sensibly even though they do not understand why they do what they do. Economists and other rational choice theorists have been skeptical about functionalist claims because anthropologists have not provided any plausible mechanism which could explain why norms have this property. Here, we outline two such mechanisms. We show that occasional learning when coupled with cultural transmission and a tendency to conform can lead to the spread of sensible norms even though very few people understand why they are sensible. We also show that norms that help solve problems of selfcontrol that arise from time-inconsistent preferences can spread if individuals tend to imitate successful people and are occasionally influenced by members of other groups with different norms.
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