From Peer Pressure to Biased Norms

This paper studies a coordination game between a continuum of players with heterogeneous tastes who perceive peer pressure when behaving differently from each other. It characterizes the conditions under which a social norm—a mode of behavior followed by many—exists in equilibrium and the patterns of norm compliance. The emergent norm may be biased compared to the average taste in society, yet endogenously upheld by the population. Strikingly, a biased norm will, under some circumstances, be more sustainable than a non-biased norm, which may explain the bias of various social and religious norms. (JEL D11, Z12, Z13)