Relational utility and social norms in games

Abstract

Social norms, the informal rules of society, and relational utility, e.g. utility generated by guilt, are mechanisms by which cooperation and coordination can be facilitated. Here we add relational utility, derived from social norms, to the standard utility functions for several classic games and find that the qualitative outcome of these games can be altered. We find that social dilemmas can be converted into coordination games that exhibit bistability, polymorphic states with non-zero degrees of cooperation can exist at equilibrium, and that intermediate levels of relational utility (i.e. when norms are only moderately enforced) can be optimal in promoting cooperation.