The Misperception of Norms: The Psychology of Bias and the Economics of Equilibrium
Our perceptions of what other people do often affect what we do. In these situations, perceptual biases can affect what everyone does. By combing the psychology of bias and the economics of equilibrium, we construct a model to predict how individual biases affect aggregate behavior. Psychologists have found at least two systematic biases in the perception of social and legal norms. Empirical studies often find a general tendency to over-estimate how much other people violate social norms â€“ a bias toward moral pessimism. We show that persistence of this bias causes more people to violate the norm than if the bias were corrected. In addition, this bias increases the probability that behavior will settle into a "bad" equilibrium with many wrongdoers, instead of settling into a â€œgoodâ€ one with few wrongdoers. Empirical studies also find that a person often over-estimates how many other people act the same as he does â€“ a bias towards social projection. We show that persistence of this bias does not change the number of people who violate the norm. Pessimism thus undermines conformity to social norms, whereas social projection leaves aggregate conformity unchanged. We apply these predictions, and some others, to empirical studies in psychology. We conclude that researchers who found false pessimism with respect to protection of trade secrets, tax compliance, alcohol abuse, and water conservation are right to predict that this bias will cause more people to do wrong, whereas researchers who found social projection bias with respect to water conservation, smoking, and drugs were wrong to predict that this bias will cause more people to do wrong.
|Date of creation:||26 Dec 2006|
|Date of revision:|
|Contact details of provider:|| Postal: Boalt Hall, Berkeley, CA 94720|
Fax: (510) 642-3767
Web page: http://www.escholarship.org/repec/blewp/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cdl:oplwec:qt0t6420jb. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.