Strategic Behavior with Tight, Loose and Polarized Norms

Descriptive norms – the behavior of other individuals in one’s reference group – play a key role in shaping individual decisions. When characterizing the behavior of others, a standard approach in the literature is to focus on average behavior. In this paper, we argue both the-oretically and empirically that not only averages, but the shape of the whole distribution of behavior can play a crucial role in how people react to descriptive norms. Using a represen-tative sample of the U.S. population, we experimentally investigate how individuals react to strategic environments that are characterized by di˙erent distributions of behavior, focusing on the distinction between tight (i.e., characterized by low behavioral variance), loose (i.e., characterized by high behavioral variance), and polarized (i.e., characterized by u-shaped behavior) environments. We find that individuals indeed strongly respond to di˙erences in the variance and shape of the descriptive norm they are facing: loose norms generate greater behavioral variance and polarization generates polarized responses. In polarized environ-ments, most individuals prefer extreme actions that expose them to considerable strategic risk to intermediate actions that would minimize such risk. Importantly, we also find that, in polarized and loose environments, personal traits and values play a larger role in de-termining actual behavior. This provides important insights into how individuals navigate environments that contain strategic uncertainty.