Opp, Norms and Institutions1 Norms and Institutions. Origins, Change and Effects Prof. Dr. Karl-Dieter Opp Universität Leipzig, Institut für Soziologie.

Opp, Norms and Institutions1 Norms and Institutions. Origins, Change and Effects Prof. Dr. Karl-Dieter Opp Universität Leipzig, Institut für Soziologie (Emeritus) University of Washington (Seattle), Dept. of Sociology (Affiliate Professor) opp@sozio.uni-leipzig.de / oppkd@u.washington.edu

Opp, Norms and Institutions2 Overview of Goals and Contents This lecture is not intended as an inventory or description of existing norms or institutions. The goal is explanation: explanation of the formation (or origins) of norms and institutions, explanation of the stability and change of norms and institutions, and (only briefly) explanation of the effects of norms and institutions. Further, this is an introductory, critical presentation of the most important extant theories.

Opp, Norms and Institutions3 Content I.Introduction II. Basic Concepts III. The Measurement of the Norm Dimensions IV.Are Explanations of Norms and Institutions Theories? V. The Problem of Social Order: The Classical Explanation of Norm Setting (Hobbes) VI. Peaceful Cooperation Without a State: Spontaneous Norm Emergence in the State of Nature and Beyond (Axelrod) VII.Resolving Disputes in Shasta County: Robert C. Ellickson‘s Theory of Spontaneous Norm Emergence VIII. Resolving Coordination Problems: The Origins of Conventions IX.Externalities and Second-Order Public Goods: Norms as Solutions of Collective Action Problems (Coleman) X.Private-Interest Sanctioning and the Emergence of Norms (Opp)

Opp, Norms and Institutions4 XI.Other Mechanisms: Some Suggestions XII.The Origin of Norms by Design: Collective Norm Making XIII.The Effects of Norms and Institutions XIV.A Toolkit for Institutional Analysis XV. Summary: An Inventory of the Mechanisms of Norm Emergence Problem: not clear how far we will come!

Opp, Norms and Institutions5 A Note: The Curse of Forgetting Prediction: 90% of what you will have learned until Friday will be forgotten after – say – half a year! Here is the curve of forgetting (Hermann Ebbinghaus): Is this lecture didactically useful?

Opp, Norms and Institutions6 What can you do to achieve a higher curve – forget less? Repeat what you have learned in the afternoon. Repeat everything next week – maybe everyday part of the slides. Read the basic readings about the theories presented! Read more about norms! Write a paper! Why might this lecture be didactically less useful than a seminar? Time between the different topics is short, so there is no time for repetition – in contrast to weekly seminars (???).

Opp, Norms and Institutions7 I.1. Norms in Everyday Life Examples in everyday life – what are norms in this lecture? Some examples for “spectacular” norms? I. Introduction Are there norms about sanctions? What do you understand by “norms”? What is not regulated in this room?

Opp, Norms and Institutions8 I.2. Some Facts About Norms Norms change over time – examples? Norms differ across societies – examples? Norms are conditional – examples? (One must not lie – correct?) There are relationships between norms – e.g.: constitutional law and specific laws. The specificity of what norms prescribe (= normative content) varies across norms. E.g. the role of a father does not specify every detail of what a father has to do. Compare this with the detailed prescription of fines for the violation of traffic laws. The precision of norms varies across norms. See articles of the constitutional law. The following facts should be explained by the theories (or mechanisms) to be discussed:

Opp, Norms and Institutions9 I.3. Questions About Norms Descriptive questions Explanatory questions about  origins,  stability and change, and  effects of norms.

Opp, Norms and Institutions10 I.4. What Social Sciences Deal With Norms? Sociology, political science (e.g. norms about international relations), anthropology, economics (property rights, law and economics …) social psychology (internalization …), jurisprudence, philosophy.

Opp, Norms and Institutions11 I.5. Institutions Examples for institutions? How would you define the term “institution”? Some basic facts about institutions – similar to those of norms:  Institutions change over time – examples?  institutions differ across societies and cultures – examples?  institutions (i.e. the norms constitutions are made up of) are conditional,  there are relationships between the norms of an institution – again: constitutional law...;  the specificity (normative content) of the norms of an institution differ across institutions;  the precision of the norms of an institution differ across institutions.

Opp, Norms and Institutions12 Descriptive questions Explanatory questions  Origins,  stability and change,  effects of norms. I.6. Questions About Institutions

Opp, Norms and Institutions13 I.7. What Social Sciences Deal With Institutions? Sociology, political science (e.g. norms about international relations), anthropology, economics (property rights, law and economics …) social psychology (internalization …), jurisprudence, philosophy.

Opp, Norms and Institutions14 II. Basic Concepts II.1. Norms The following list consists of some definitions from the literature. Question: What are the criteria used in the definitions? (Perhaps make notes when we go through the definitions.)

Opp, Norms and Institutions15 (1) "A norm will be defined as an expectation about how one ought to act, enforced by the threat of sanctions or the promise of reward" (Kerr 1995: 33). (2) "In this model … social norm … is a term for behavioral regularities that emerge as people interact with each other in pursuit of their everyday interests" (Posner 2000: 26). (3) “ … a social norm is (i) a behavioural regularity that is (ii) based on a socially shared belief how one ought to behave which triggers (III) the enforcement of the prescribed behaviours by informal social sanctions" (Gächter and Fehr 1997: 276 – italics in the paper). (4) R. H. McAdams (1997) summarizes the definitions of an extensive literature (see the quotations on pp. 339-340): "Roughly speaking, by norms this literature refers to informal social regularities that individuals feel obligated to follow because of an internalized sense of duty, because of a fear of external non-legal sanctions, or both" (340).

Opp, Norms and Institutions16 expectations of third parties that an action ought to be performed (1); shared normative expectations (“oughtnes”) of third parties (3); sanctioning (positive or negative) of norm violation (1)(3); regularity of a behavior (2)(3); internalization of norm (“feel obligated”) (4); felt obligation of the performance of an action (= internalization) that is not formally prescribed (4); fear of sanctioning (4) and – one could add – expectation of rewards (positive sanctioning). The definitional characteristics are: Some definitions consist of several criteria!

Opp, Norms and Institutions17 (1) Is a simple or complex definition (one consisting of several criteria) preferable? Two questions arise: (2) What is the most useful dimension (property) or what are the most useful dimensions to be included in a definition? NOTE: no author provides any reason why he or she chooses the definition he or she suggests!

Opp, Norms and Institutions18

Opp, Norms and Institutions19 What dimensions are most useful for a definition of norms? Suggestion: oughtness should be the central criterion. Reason: This is rarely addressed in the literature, as we will see, and its explanation is of interest. A norm could (and should!) be defined as a belief that one should behave in certain situations in a certain way or that one should have certain attitudes, preferences or cognitive beliefs. Acceptance of a norm means the extent to which a statement describing a norm (see definition before) is approved of. Thus:

Opp, Norms and Institutions20 All other definitional characteristics could be dependent or independent variables. Conditionality is taken account of in the definition. The norm does not only refer to behavior. Also cognitive beliefs or attitudes or preferences may be subject to oughtness – see religious beliefs. Some implications:

Opp, Norms and Institutions21 II.2. Institutions (1) "We define institutions as a system of human-made, nonphysical elements – norms, beliefs, organizations, and rules – exogenous to each individual whose behavior it influences that generates behavioral regularities." (Greif and Laitin 2004: 635) (2) "In general, historical institutionalists work with a definition of institutions that include both formal organizations and informal rules and procedures that structure conduct." (Thelen and Steinmo 1992: 2). (3) "Institutions are the rules of the game in a society or, more formally, are the humanly devised constraints that shape human interaction" (North 1990: 3). Some examples for definitions:

Opp, Norms and Institutions22 Note that the definitions are very broad – see the first definition: “institutions” refers to almost everything! It is not clear why the definitions are so broad. Organizations and norms are denoted as “institutions” – why? We understand by institution phenomena for which there are so far few convincing theories: these are “institutions” as “rules of the game” (Definition 3 by D. North). Thus: “Institutions” are systems of norms Suggestion:

Opp, Norms and Institutions23 Examples for institutions: Constitution of Germany, the US, and other constitutions Inheritance laws of a country Voting rights Institution of the market Health care system Institutions for regulating common pool resources System of rules for getting a Ph.D. or, in general, a doctorate

Opp, Norms and Institutions24 II.3. Values There are different definitions as well. A frequent definition reads: values are relatively general norms such as human rights. Why do we need a concept that denotes relatively general norms – if it is not clear how general a norm must be in order to be called a value? Thus: we don’t need the concept of value! However, using it in the above sense does not hurt either. Why not distinguish simply between more or less general norms? Sometimes “values” are defined as attitudes (evaluations) – here the term attitude/evaluation is clearer!

Opp, Norms and Institutions25 II.4. Sanctions (1) "Sanctions refer to any kind of reactions to a behavior, positive or negative, that attempt to alter the behavior, or decrease or increase its frequency" (Labovitz and Hagedorn 1973: 284). (2) "... people receive physical or psychological rewards and punishments for their behavior, which encourages or discourages them to conduct themselves in a similar way in the future" (Labovitz and Hagedorn 1973: 284). (3) "The terms 'sanction' and 'effective sanction' will be used interchangeably, indicating... an action on the part of a norm beneficiary that has some effect in moving the focal action in the direction intended by the sanctioner" (Coleman 1990: 40). There are different definitions as well, e.g.:

Opp, Norms and Institutions26 Reactions to a norm violation with the goal to influence future behavior (1) – intention of the sanctioner relevant; reward/punishment from the perspective of the sanctionee – the person who is the target of the sanction – for refraining from norm violation (2); reaction to norm violation that changes the sanctioned behavior in the future (3) – effect of the reaction relevant. The definitional criteria are:

Opp, Norms and Institutions27 Which definition is to be preferred? We can thus distinguish the following definitions: intention definition (first definition before), reward-punishment definition (second definition before), effect definition (third definition before), combination of the definitions. One question social scientists are concerned with is to explain when and how individuals react to norm violations. This speaks in favor of the intention definition.

Opp, Norms and Institutions28 Another interesting question is the extent to which behaviors intended to change behavior actually reach their goal, i.e.: when are sanctions effective? See questions of deterrence or effectiveness of laws. This speaks in favor of the effect definition. Perhaps useful: Sanctions = intention definition (reactions that intend to alter a behavior) What the effects are is then an empirical question and is to be explained. Suggestion: when one speaks of “sanctions” one should always tell what concept is used!

Opp, Norms and Institutions29 Note: reactions to a norm violation that are only intended to hurt the norm violator (“revenge”) are not sanctions! Useful? Perhaps the intention definition could be extended: Sanctions = df. reactions to a norm violation with the goal to influence future behavior or to hurt the violator.

Opp, Norms and Institutions30 II.5. Cited Literature in II: Coleman, James S. 1990. "The Emergence of Norms." Pp. 35-60 in Social Institutions. Their Emergence, Maintenance and Effects, edited by Michael Hechter, Karl-Dieter Opp, and Reinhard Wippler. New York: Aldine de Gruyter. Gächter, Simon, and Ernst Fehr. 1997. "Social Norms as a Social Exchange." Swiss Journal of Economics and Statistics 133:275-292. Greif, Avner, and David D. Laitin. 2004. "A Theory of Endogenous Institutional Change." American Political Science Review 98:633-652. Kerr, Norbert L. 1995. "Norms in Social Dilemmas." in Social Dilemmas: Perspectives on Individual Groups, edited by David A. Schroeder. Westport, Conn.: Praeger. Kuran, Timur. 1998. "Moral Overload and Its Alleviation." Pp. 231-266 in Economics, Values, and Organization, edited by Avner Ben-Ner and Louis Putterman. Cambridge: Cambridge University Press. Labovitz, Sanford, and Robert Hagedorn. 1973. "Measuring Social Norms." Pacific Sociological Review 16:283-303.

Opp, Norms and Institutions31 McAdams, Richard H. 1997. "The Origin, Development, and Regulation of Norms." Michigan Law Review 96:338-433. North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press. Opp, Karl-Dieter. 2000. "Die Entstehung sozialer Normen als geplanter und spontaner Prozeß." Pp. 35-64 in Normen und Institutionen: Ursachen und Wirkungen, edited by Regina Metze, Kurt Mühler, and Karl-Dieter Opp. Leipzig: Leipziger Universitätsverlag. Posner, Eric A. 2000. Law and Social Norms. Cambridge, Mass.: Harvard University Press.

Opp, Norms and Institutions32 III. The Measurement of the Norm Dimensions Question: Can norms be measured at all? Interactionists claim that norms form in the process of interaction. E.g., only in the court it is negotiated whether a defendant has committed a crime such as theft (§242 in the German StGB – see next slide), i.e. has violated a norm. Is the argument correct? What is negotiated in the court? In order to test hypotheses about norms (or institutions) one needs to measure norms and institutions. How are decisions made if norms are vague – such as: one should not harm others? Assume, you mention this norm if somebody lights a cigarette next to you, and the smoker thinks that norm does not apply in this situation!

Opp, Norms and Institutions33 § 242 Diebstahl (1) Wer eine fremde bewegliche Sache einem anderen in der Absicht wegnimmt, die Sache sich oder einem Dritten rechtswidrig zuzueignen, wird mit Freiheitsstrafe bis zu fünf Jahren oder mit Geldstrafe bestraft. (2) Der Versuch ist strafbar.

Opp, Norms and Institutions34 In order to measure norms, the following phenomena are to be measured – all are components or dimensions of the existing norms definitions: behaviors: regular behavior and sanctions as reactions to norm violations and, thus, behaviors; attitudes and motives: internalization = norm conformity is an intrinsic motive (=acceptance of a norm); kinds of oughtness (should/must/is allowed to) and degree of oughtness; cognitive beliefs about the conditions for a norm to hold (conditionality) and about the probability of sanctioning; intention to punish or reward behavior. Thus, the measurement refers to phenomena external to an individual (behavior) or internal (all the rest).

Opp, Norms and Institutions35 Which methods are most appropriate to measure the norms dimensions mentioned before and what are the problems of these methods for measuring norms? Interview?  Problems? Observation (participant or non-participant)?  Problems? (E.g. measurement of sanctions or attitudes? SEE SLIDE 37.) Analysis of documents?  Problems? (What do people include in documents: always the truth? Important: possibility of access to events of the distant past! SEE NEXT SLIDE.) Qualitative or quantitative methods? Thus: each method has its problems. In measuring norms, each method should be checked in regard to its usefulness.

Opp, Norms and Institutions36 Question: What are the problems of measuring norms if documents are analyzed – such as diaries or minutes of a parliamentary session where norms are reported? Hint: writing a text is a behavior (or a sequence of behaviors). What could be the motives or incentives to write a text in a certain way? Is it always a goal of the writer(s) to tell the truth? What about errors (misperception) – perhaps actors want to tell the truth but they don’t know it!

Opp, Norms and Institutions37 Question: To what extent can sanctions be measured by observation? If sanctions are defined as actions with the intention to punish a norm violation, then subjective phenomena must be ascertained which cannot be directly observed. This holds too for sanctions which are defined as behaviors that are rewarding for the targets of a sanction. If sanctions are simply defined as reactions to norm violation then causality must be determined. For this one needs a theory or experimental design!

Opp, Norms and Institutions38 Question: Are there possibilities to avoid the measurement of the norms dimensions because measuring subjective phenomena is difficult? (Think of “revealed preferences”!) Taking a certain route to the bus every morning, taking the bus instead of a tram, buying regularly the same yoghurt One possibility might be to infer the existence of norms from behavior. The assumption could be: the more frequent a behavior is performed by the members of a group, the more likely it is that the behavior is normatively demanded. Correct? Are there examples for regularly performed behavior where no oughtness is involved?

Opp, Norms and Institutions39 Discussion of some “conventional” measurement, illustrated with the procedure of J.M. Jackson:  Jackson, Jay M. 1966. "Structural Characteristics of Norms." Pp. 113-125 in Role Theory. Concepts and Research, edited by Bruce J. Biddle and Edwin J. Thomas. New York: Wiley. Some examples from existing research Discussion of the factorial survey, based on:  Beck, Michael, and Karl-Dieter Opp. 2001. "Der faktorielle Survey und die Messung von Normen." Kölner Zeitschrift für Soziologie und Sozialpsychologie 53:283-306,  Opp, Karl-Dieter. 2002b. "When Do Norms Emerge by Human Design and When by the Unintended Consequences of Human Action? The Example of the No-Smoking Norm." Rationality & Society 14:131-158 (see also Opp 2000). Contents of the rest of this section:

Opp, Norms and Institutions40 III.1. The Procedure of J.M. Jackson Jackson measures behaviors that are performed more or less frequently, and evaluations of the behaviors: approval, attitudes, normative expectations (= oughtness). Those dimensions can be measured in a two-dimensional coordinate-system:

Opp, Norms and Institutions41 Example: frequency of raising your hand per session in this lecture (or: hours per week reading). e.g. frequency of hand raising of a student (may range from 0 to 8 per session = empirical maximum value) e.g. evaluation of one other student or average of class overachiever (Streber) slug (Faulpelz)

Opp, Norms and Institutions42 Questions: What does the curve mean? (Only oughtness?) Which dimensions could be represented on the y-axis and the x-axis? Could the curve also describe the norm of groups? (Example: average attendance of sociology classes in this semester – what different forms of curves could exist?) Is it possible to construct measures which describe different properties of a norm? Is there a value of y for each value of x? Can conditionality be represented in the coordinate system?

Opp, Norms and Institutions43 Can the change of norms over time be depicted in the diagram? Jackson constructs group properties, i.e. a group norm, on the basis of individual properties. Could a group norm be defined independent of an individual distribution of norms? IMPORTANT: such measures are based on individual properties!!! Can the coordinate system be used for theoretical purposes? (What hypotheses could be formulated? E.g. could network density in a class affect the shape of the curve?) How could these properties be measured in a questionnaire?

Opp, Norms and Institutions44 Critique? There is no theory so far! But Jackson formulates some hypotheses, such as: “… the greater the consequence behavior has for a group and its central concerns, the narrower will be the range of tolerable behavior” (p. 115). The hypotheses are often not very clear (how can the “consequence” and “the central concern” for a group be measured?), not very informative, and they are formulated ad hoc, i.e. without applying a theory! Thus: this is an example for a classification and measurement, that may be used for descriptive purposes. But the theoretical relevance is so far not clear. There is so far no systematic attempt to use these measures in a theory.

Opp, Norms and Institutions45 III.2. Some Examples from Research From the DFG-project (DFG=German National Science Foundation) on the East German revolution (translated by KDO) Opp, Karl-Dieter, Peter Voss, and Christiane Gern. 1995. The Origins of a Spontaneous Revolution. East Germany 1989. Ann Arbor: Michigan University Press. Politics should be left to the elected representatives of the people. A citizen should become politically active only if he or she believes that he or she can achieve something. Violence against persons to achieve political goals can be morally justified. If a state oppresses free expression and other basic rights of the citizens then also violence of the citizens is justified. Five answer categories, from “fully disagree” to “fully agree.” Items for the measurement of the acceptance of a protest norm:

Opp, Norms and Institutions46 “I think that violence against objects is morally justified. Does this hold never, rarely, sometimes, most of the time or always?” If some highway is constructed near your apartment. If the right to demonstrate will be restricted. If the police uses firearms against demonstrators. …. Answer categories “yes” or “no” What are the situations when yourself would be willing to use violence against objects: CONTINUATION What do you think about the following statement(s):

Opp, Norms and Institutions47 If I wouldn’t do anything against nuclear power plants I would have a bad conscience. Five answer categories: fully agree, agree, indifferent, disagree, fully disagree. THE FOLLOWING IS FROM: Opp, K.-D., K. Burow-Auffarth, P. Hartmann, Th. von Witzleben, V. Pöhls, and Th. Spitzley. 1984. Soziale Probleme und Protestverhalten. Eine empirische Konfrontierung des Modells rationalen Verhaltens mit soziologischen Hypothesen am Beispiel von Atomkraftgegnern. Wiesbaden: Westdeutscher Verlag (124-127): If I do something against the construction of nuclear power plants I sometimes feel that I do something that I actually should not do.

Opp, Norms and Institutions49 III.3. The Factorial Survey The measurement procedures discussed so far are not appropriate to capture the complex conditions under which norms hold (i.e. their conditionality). This is the strength of the factorial survey – also called vignette analysis. Basic idea: possible situations are described where a norm could hold. Respondents are then asked to tell to what extent a certain behavior should be performed or to what extent an attitude or cognitive belief should exist in the respective situation (evaluation dimension)

Opp, Norms and Institutions50 Example: you want to find out when it is allowed to smoke in a restaurant. First step: specify under what circumstances this norm may hold (these are hypotheses), e.g.: 1.Class of the restaurant: pub, other; 2.number of persons in the restaurant who smoke. Thus, two dimensions (= variables) may be important. These are situational characteristics which could be relevant for the norm to hold. Each of these dimensions has certain values. E.g. class of restaurant may consist of: pub/other = 0/1 (two values); number of persons who smoke – possible values: none, few, many almost all, (four values).

Opp, Norms and Institutions51 The values of each dimension (variable) are combined. That is to say, the Cartesian product could be computed. In this case: 2 x 4 = 8 Thus, there are eight possible situations. Examples: There is a pub where nobody smokes. There is a restaurant where few people smoke. These descriptions of situations are called vignettes.

Opp, Norms and Institutions52 Here are the dimensions and their values from the research reported in Opp 2002 (reference see below):

Opp, Norms and Institutions53 Mr. Müller goes to a restaurant. This is a top class restaurant, in which smoking is prohibited. There is no one in the restaurant who smokes. Mr. Müller stays only for a short time in the restaurant in order to have a beer. He smokes most of the time more than a package of cigarettes per day. Here is an example of a vignette from the study:

Opp, Norms and Institutions54 To what extent does a non-smoking norm hold in these situations? To answer these questions respondents are presented with the following scale for each vignette on which they could mark a value: It is not at all allowed to smoke It is in any case allowed to smoke. It is not allowed to smoke It is allowed to smoke Second step: the rating scale (evaluation dimension) has to be specified which answers the question:

Opp, Norms and Institutions55 Thus: in applying the factorial survey to measure norms the first step is to devise descriptions of situations (= vignettes) – combinations of values of the dimensions. These are the norm- relevant situations. Then a certain number of the possible (and meaningful – see later) situational descriptions are assigned to each respondent by chance. Each respondent thus gets a set of vignettes. Second, for each vignette a rating scale is presented in order to find out to what extent a norm holds. The size of the sets depends, among other things, on the difficulty of answering the vignettes and on the length of the questionnaire.

Opp, Norms and Institutions56 Practical problems: How many vignettes should a respondent be presented with? How many dimensions are appropriate in a vignette? How many values should each dimension have? Example: number of persons. One could present percentages from 0 to 100 with a distance of 1 (1, 2, 3...) – this would result in a great number of vignettes – see next slide. Do respondents discriminate between these values? In any event: the dimensions and their values must be theoretically useful!

Opp, Norms and Institutions57 Statistical analysis How is a factorial survey analyzed statistically? Here is the data matrix for the non-smoking norm (Opp 2002): Are all combinations of the values of the dimensions meaningful? Example: dimensions are age and occupation. Let one occupation be university professor, and let the age range from 16 to 65. One possible vignette would include a professor with age 16. Meaningful?

Opp, Norms and Institutions58 Acceptance of the non-smoking norm is the average of the judgments for the two situations per respondent.

Opp, Norms and Institutions59 Other examples for norms that could be measured by a factorial survey? Conditions for self-defence, conditions for lying or telling the truth – white lie (Notlüge)..., when should one keep promises? When is one allowed to break a law or even should or must break a law – such as participating in an illegal demonstration, blocking streets, occupying buildings (like university offices)? When do people think they should get a divorce? (See Diefenbach and Opp 2007 – reference next page)

Opp, Norms and Institutions60 What are the strengths and weaknesses of the factorial survey to measure norms? Problem: the situations are hypothetical. Often answers may not be very reliable. Pretest is important. Among other things, one should explore to what extent the situations in the vignette resemble real situations for the respondents. Other problems? Strength: the factorial survey allows the detailed measurement of the conditionality of norms; strength: it is possible to determine the weight of the dimensions, i.e. how strong their effect is on the rating of the “oughtness.” Other strengths?

Opp, Norms and Institutions61 References for the Measurement of Norms with the Factorial Survey Beck, Michael, and Karl-Dieter Opp. 2001. "Der faktorielle Survey und die Messung von Normen." Kölner Zeitschrift für Soziologie und Sozialpsychologie 53:283-306. Jasso, Guillermina. 2006. "Factorial Survey Methods for Studying Beliefs and Judgments." Sociological Methods & Research 34:334-423. Diefenbach, Heike, and Karl-Dieter Opp. 2007. "When and Why Do People Think There Should Be a Divorce? An Application of the Factorial Survey." Rationality & Society 19:485-517. Opp, Karl-Dieter. 2002. "When Do Norms Emerge by Human Design and When by the Unintended Consequences of Human Action? The Example of the No-Smoking Norm." Rationality & Society 14:131-158. Opp, Karl-Dieter. 2003. "Die Evolution sozialer Normen." S. 139-205 in Evolution in den Natur-, Sozial- und Geisteswissenschaften, hrsgg. Von Andreas Diekmann and Rupert Moser. Bern: Paul Haupt. (Ausführlichere Fassung von Opp 2002 – siehe vorangegangenen Literaturhinweis.)

Opp, Norms and Institutions62 Recent contribution on the factorial survey in general – with further references: Auspurg, Katrin, Thomas Hinz, and Stefan Liebig. 2009. "Komplexität von Vignetten, Lerneffekte und Plausibilität im Faktoriellen Survey." Methoden - Daten - Analysen 3:59-96.

Opp, Norms and Institutions63 IV. Are Explanations of Norms and Institutions Theories? We will discuss the major theories about the emergence of norms and institutions. Question: What is the relationship between these theories? Do they contradict each other? Are some derivable from others? Thesis: The “theories” describe different processes of norm emergence (= mechanisms). In other words, the “theories” describe different constellations of conditions under which different processes of norm emergence arise.

Opp, Norms and Institutions64 In order to explain the different processes a general theory of action must be applied. This ensures that causal statements are not ad hoc. Most existing explanations of norms and institutions apply – often implicitly – a wide version of the theory of rational action. We should ask for each “theory” of norm emergence to be discussed what the background theory is that is applied! An important question that we will address throughout this lecture is under what conditions which processes obtain.

Opp, Norms and Institutions65 In general, what are the theories that could be applied in explaining processes of norm emergence? RCT – includes game theory  important: distinguish wide and narrow version; functionalism, power theories, marxist hypotheses... For a discussion of some of the theories see: Mahoney, James, and Dietrich Rueschemeyer. 2003. Comparative Historical Analysis in the Social Sciences. Cambridge: Cambridge University Press.

Opp, Norms and Institutions66 Some basics (perhaps you know this?) How to explain singular events or relationships between singular events: the logic of explanation. Example: Why did smoking decrease in Germany in 2008? Explanans Law: The higher the costs of smoking, the less people smoke. Initial conditions: The anti-smoking law in Germany in 2008 increased the costs of smoking. Explanandum: Smoking decreased in Germany in 2008. When is an explanation “adequate”?

Opp, Norms and Institutions67 V. The Problem of Social Order: The Classical Explanation of Norm Setting A good starting point for an introduction to the explanation of norms and institution is a general question: What are the origins of social order? If this question is answered and if (!) “social order” refers to a system of norms, then all questions about the emergence of norms are answered!

Opp, Norms and Institutions68 V.1. The Solution of the Problem of Social Order by Thomas Hobbes The most famous answer to the question of the origin of social order or “how social order is possible” is by Thomas Hobbes (1588 to 1679): Leviathan Or the Matter, Forme and Power of a Common-wealth Ecclesiasticall and Civil, first 1651. See in particular chapters 13 and 17.

Opp, Norms and Institutions69 The consequence is a war of all against all (“where every man is enemy to every man”). Hobbes characterizes this state of nature and the war of all against all in the following way: The initial situation is a state of nature which is characterized in the following way: there are no internalized norms, all individuals are pure egoists, individuals are in a conflict situation, i.e. there is competition for goods; this leads to hostility and the attempt to subjugate others; there is no organization or state that prevents violence or issues laws; individuals behave “rationally,” i.e. they try to maximize their utility by enhancing their material welfare.

Opp, Norms and Institutions70 „In such condition, there is no place for industry; because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving, and removing, such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short“ (chapter 13). The last part after the semicolon is a famous text and not printed in bold in the original! Question: why is there no infrastructure, culture etc.? (For details see later.) – think of “function” of property rights!

Opp, Norms and Institutions71 How does “social order” originate in such a situation? (1) Men love (their own) liberty and dominion over others (which is a condition for the war of all against all); (= motive 1) (2) men want their own “preservation” and a “more contented life”; (= motive 2) (3) there is a belief ("foresight") that (only?) "restraint" (= state) leads to realizing the second motive by imposing fear of punishment for pursuing the first motive; (4) individuals are willing (= motive 3) to transfer rights to a central authority. The basic idea is that a “Leviathan” (translation is sea monster), i.e. a state, is created. How does the state originate? Hobbes’s argument can be reconstructed in the following way:

Opp, Norms and Institutions72 (5) establishing order is not possible by  covenants without a sword (why?), by  "the joining together of a small number of men," (why?) and  being "governed, and directed by one judgment, for a limited time“ (why? think of stability.) (6) Consequence: A “Leviathan” originates. Assumption seems to be that the second motive is stronger than the first one – otherwise people would not be willing to sacrifice power in order to gain a “more contented life”!

Opp, Norms and Institutions73 The causal structure of the argument thus is: Preference for domination Preference for peace Belief that establishing a state is most effective for realizing preference for peace Readiness to transfer rights to authority Creation of a state (central authority) - + + + (strong) Alternative means for “order” not promising +

Opp, Norms and Institutions74 Nothing – the state of war remains stable; small groups form who loot and kill others – the physically strongest – gain power (similar to alternative 2 by Hobbes); small groups unite to form a sort of authoritarian organization like a Mafia (similar to alternative 2 by Hobbes) etc. neighborhoods form an association to protect each other (like neighborhood watch in the US); "spontaneous" cooperation: e.g., somebody begins to "cooperate" in the sense that he or she builds up a peaceful relationship with his neighbor who reciprocate etc. (like the Axelrod model – see later); What could happen, if conditions 1 and 2 – motives 1 and 2 – (and perhaps other conditions?) are given? Could there be other “solutions” than the origin or creation of a state? CONTINUED NEXT PAGE

Opp, Norms and Institutions75 individuals hire others and pay them for protection – see countries with a high crime rate where guards are hired; Hobbes’s solution: individuals transfer rights to a central authority. THIS IS THUS ONLY ONE POSSIBLE SOLUTION!

Opp, Norms and Institutions76 What are the central problems of Hobbes’s solution? It is not clear what the "mechanism,“ i.e. the process, of the emergence of a state is. Assume there is a large group. Who initiates state foundation? Who gets which position etc.? Under what conditions will people be willing to transfer rights, and act to found a state? Think of the problem of collective action (free rider problem). Common interest of the members of a large group does not suffice to realize the goals (Olson). It is not clear under what conditions certain “passions” (motives) and “reason” (beliefs) lead to peace. Who controls the state? Hobbes’s argument implies that there are no stateless societies. Empirical research does not confirm this implication.

Opp, Norms and Institutions77 It is assumed that the state realizes the common good. See “common good fiction” in public choice theory. Is only external punishment for order relevant? Think of internalization of social norms.

Opp, Norms and Institutions78 What is meant by “social order”? “Social order” may refer to cooperation in a “prisoner’s dilemma” – will be discussed later. Intuitively: refraining from behavior that hurts others like fraud, stealing, using violence. Thus, order means a certain class of regular behaviors.  Taylor 1982, Community …, p. 44: “In the most restrictive of its common usage, ‘social order’ refers to an absence, more or less complete, of violence, a state of affairs in which people are relatively safe from physical attack. On a somewhat broader view, “social order” is security of property (against theft and damage at the hands of other individuals) as well as of persons. This is the order Hobbes was concerned with and he called it Peace.” (emphasis not in the original) = refraining from certain behaviors.

Opp, Norms and Institutions79 What is the “problem” of social order? (1) It could mean in general: how does “social order” originate? (2) In regard to Hobbes initial situation (war of all against all) it could mean: How does “order” emerge in a state of nature? (Explanatory question) How could a “war of all against all” be avoided? (Technological question – not identical with explanation of order) Implication: order in the above sense is a quantitative variable that is dichotomized. Why not distinguish degrees of order – more or less orderliness?

Opp, Norms and Institutions80 Does Hobbes address the EXPLANATION of norms and institutions? Transfer of rights to a central authority is addressed: this is a change of norms (rights = kind of norms). Thus: Citizens are no longer allowed to do certain things such as taking the law in one’s own hand – the state sets “restraints.” Not clear what exactly these norms are. Thus, an explanation of the emergence of a state is equivalent to explaining norms. But what these norms are is not specified. A central authority exists, and there are norms specifying what the members of this authority are allowed and not allowed to do. But these norms are not addressed in detail!

Opp, Norms and Institutions81 If cooperation emerges then a regular behavior is explained. This is one meaning of “norm.” Sanctioning (of the state – only?) is included in Hobbes’s model as well – this is another dimension of the norm concept. Question: Is it possible to explain the kind of norms – does Hobbes’s model imply certain propositions? Hobbes would predict that those norms will be issued that are expected to solve the problem of social order. Question: what happens if there are different expectations – how are they reconciled? Thus, Hobbes addresses the dimensions of the norms concept, but he does not provide detailed, informative propositions.

Opp, Norms and Institutions82 What can we learn from Hobbes about the emergence of norms and institutions? The “state of nature” is a situation with strong externalities. This suggests that a central condition for the origin of norms and institutions might be externalities. As we will see later, this is a central variable in all theories of norm emergence. However, if there are externalities, there could be different reactions by those affected. It is not clear what exactly happens if there are externalities. Thus, the question is: if there are externalities, what are the conditions for the emergence of which kind of norms? Hobbes applies a general background theory: individual preferences like egoism, constraints like the behavior of others and maximization of utility are conditions for the emergence of norms. This theory could be applied to explain the origin and effects of norms in general.

Opp, Norms and Institutions83 V.2. The Normative Solution: Talcott Parsons The so-called normative solution is advanced especially by Talcott Parsons. Here are some quotations: “Essentially that men ‘being reasonable’ ought to, and in general will in pursuit of their ends subordinate their actions, whatever these may be, to certain rules. The essential content of these rules is to respect the natural rights of others, to refrain from injuring them” (Structure, 96). “… the basic condition on which an interaction system can be stabilized is for the interests of the actors to be bound to conformity with a shared system of value orientation standards” (The Social System, 38) “… without the attachment to the constitutive common values the collectivity tends to dissolve” (The Social System, 41)

Opp, Norms and Institutions84 Question: What are the major problems of this “solution”? There is no theory that explains when the required norms will emerge. The normative solution could be interpreted as a technological statement: if there are norms then there will be “Peace.” BUT: is this technological statement correct?  In general, norms are not sufficient to guarantee that the regulated behavior is performed.  Not clear what the other conditions for conformity are. The free rider problem is not addressed: it is well known (at least since M. Olson’s theory of collective action) that especially in a large group “reasonable” behavior is not carried out (i.e. doing something to realize goals cannot simply be taken for granted). See as an example environmental pollution.

Opp, Norms and Institutions85 V.3. The General Mechanism of Norm Emergence in Hobbes’s “Leviathan”: the Transfer and Centralization of Rights Foundation of clubs (e.g. a chess or tennis club), associations etc. (see the detailed “Vereinsrecht” – law of associations); informal groups: some friends develop a division of labor so that certain tasks and rights – organizing weekend trips or dinners in restaurants – are transferred and centralized; formal organizations like firms: employees transfer rights to the firm (i.e. to managers, the board etc.). We can describe the process (or “mechanism”) outlined by Hobbes that leads to social order in a general way: individuals transfer rights to a collectivity (or to a group of other individuals). These individuals then make rules and enforce them. This happens not only in a state of nature but in real societies as well. Examples?

Opp, Norms and Institutions86 Question: under what conditions will this mechanism be chosen? Some brainstorming.. Transfer of rights may occur spontaneously – step by step: a member of a friendship group offers to organize the next visit to a restaurant. The other friends like the choice and assign the task alternately. Again, this works well and is repeated. Conditions for voluntary transmission to a central authority: There exists a central authority (or a group) rights may be trasferred to. “Central authority” fulfills the needs of the members and it is expected that this will happen in the future; it is not too costly if the central authority fails = low expectation of failure. perceived – not really existing – alternatives to transferring rights are regarded as more costly, such as voting on restaurant proposals or voting on every decision in a sports club. These are transaction costs.

Opp, Norms and Institutions87 There are political entrepreneurs – individuals who bear the costs of setting up the organization and run it. = condition for founding a central authority if there is none! Those kinds of rights will be transferred that are least likely to hurt members – e.g. one will usually not transfer the right to use all his or her assets! However, this happens sometimes – see “Ermächtigungsgesetz” (enabling act) of 1933 in Germany. Ermakoff, Ivan. 2008. Ruling Oneself Out. A Theory of Collective Abdications. Durham: Duke University Press. Note: perception of alternative institutions or norms is important – see the creation of constitutions such as the US constitution: new ideas emerge! Other conditions?

Opp, Norms and Institutions88 This is the first time we ask the general question: We will ask this question for each mechanism! Concluding note What are the conditions for a given mechanism of norm emergence? The different theories or mechanisms – like the one by Hobbes – outline mechanisms but they never state the conditions that are relevant for the origin of this and not of alternative processes! Another question will be: what exactly are the differences between the different mechanisms?

Opp, Norms and Institutions89 VI. Peaceful Cooperation Without a State: Spontaneous Norm Emergence in the State of Nature and Beyond An important extension of Hobbes‘s approach is Robert Axelrod‘s „The Evolution of Cooperation.“ The basic assumption is that the state of nature is a prisoner’s dilemma. I will first explain what this means and then turn to Axelrod’s theory.

Opp, Norms and Institutions90 VI.1. The State of Nature as a Prisoner’s Dilemma (PD) What is a prisoner’s dilemma? Here is the original story: Behavioral alternatives of prisoner A Behavioral alternatives of prisoner B Not confess Confess Not confess1 year prison / 1 year prison 10 years prison / Free ConfessFree / 10 years prison 8 years prison / 8 years prison First entry is “payoff” for A, second is payoff for B

Opp, Norms and Institutions91 Behavioral alternatives of person A Behavioral alternatives of person B Cooperate ( C ) Defect (D) Cooperate (not confess) 3, 3 1, 4 Defect (confess) 4, 1 2, 2 The general structure of the situation is the following: A graph that again depicts the structure of the payoffs: Highest payoff 4 Lower payoff 3 Lowest payoff 1 Lower payoff 2

Opp, Norms and Institutions92 What has all this to do with Hobbes’s problem of social order? Here is the PD matrix again: Behavioral alternatives of person A Behavioral alternatives of person B Cooperate (C) Defect (D) Cooperate (not confess) 3, 3 1, 4 Defect (confess) 4, 1 2, 2 Defect = war Cooperate = peace (any kind of making a contract, trust etc.) Warfare is the dominant alternative for everybody

Opp, Norms and Institutions93 Let’s look again at the PD: Behavioral alternatives of person A Behavioral alternatives of person B Cooperate (C) Defect (D) Cooperate (not confess) 3, 3 1, 4 Defect (confess) 4, 1 2, 2 Assume now the game is not played once, it is repeated (iterated). Does this change the situation? Example: You need daily a yoghurt, and a shop owner puts the yoghurt at a certain place in front of your door, where you put the money in a small box. Questions: (1) There is a one-time purchase, (2) you buy every day. Would it “pay” to cheat?

Opp, Norms and Institutions94 Assume there is cooperation for some days – both get 3. Then you defect at day 10, whereas the shop owner gives you the yoghurt (i.e. he cooperates): You earn 1 point (4 instead of 3). But then the shop owner will defect as well and your payoff is 2. Does it pay to defect? If you cooperate – say – 5 days, you get five times 3 = 15. If you defect immediately – you get 4 (the first defection on day 1) + (4 x 2) (defection for four days), i.e. a payoff of 12. Thus, in repeated PDs defection is not always profitable.

Opp, Norms and Institutions95 Question: Can you imagine situations where even in an iterated PD defection pays? (1) The payoff for defection is huge, compared to cooperation (not 4, but – say – 4000). AND you need the money: Thus, in repeated PDs cooperation is not always profitable. 2, 2 0, 4000 4000, 0 1, 1 (2) The play is repeated only a finite number of times, i.e. it is a finite game. (3) You think that the partner is not trustworthy (he will not sustain cooperation – you heard bad rumours about him).

Opp, Norms and Institutions96 The basic idea in Robert Axelrod’s theory (for references see at the end of this section) is: if the prisoner’s dilemma is repeated, cooperation will be likely – under certain conditions. Note how Axelrod formulates the problem at the beginning of his book “The Evolution of Cooperation” (1984: 3): “Under what conditions will cooperation emerge in a world of egoists without central authority?” What is the difference to Hobbes’ problem? VI.2. How Can Cooperation Emerge in a Prisoner’s Dilemma Situation? The Theory of Robert Axelrod

Opp, Norms and Institutions97 There is no “Nirwana approach” – who is interested in a utopian situation as Hobbes describes it? Axelrod assumes egoistic actors and that there are no internalized norms. This is the case in many real situations so that Axelrod’s theory can be applied. Axelrod’s procedure The question of how cooperation can emerge in a world of egoists can be formulated in the following way: What strategy of the actors is best to generate cooperation in the long run? For example: one strategy could be: if you meet somebody, choose C and D by chance. Other possibilities:

Opp, Norms and Institutions98 Play always C. Play always D. Begin with C and then by chance choose C and D. Begin always with C and then do what the other player did on the previous move. This is TIT FOR TAT. Begin with C; if the opponent defects twice then defect as well: TIT FOR TWO TATs. Play C as long as the other player plays C. Then play always D. The payoffs of each of the two players can be computed, based on the game matrix, e.g.: 3, 3 1, 4 4, 1 2, 2

Opp, Norms and Institutions99 To answer the question of what strategy yields the best results Axelrod invited game theorists to a computer tournament and to submit programs. The program that won was submitted by Anatol Rapoport: TIT FOR TAT: choose C on the first move, imitate the player on the previous move. Thus, as long as the other player chooses C, play C. If he/she chooses D, choose D etc. Then a second tournament was organized. Again, TIT FOR TAT made it: it was the strategy that in general was most successful, i.e. it yielded the best results in many different situations (i.e. when it meets many different strategies).

Opp, Norms and Institutions100 Be NICE, i.e. never defect before an opponent does. This implies: always begin with C. Be FORGIVING, i.e. defect only once and never “hold a grudge once you have vented your anger.” Thus, be not too harsh. Be PROVOCABLE, i.e. one should get “mad” immediately after the defection of an opponent and not, e.g., continue with D several times. Be CLEAR, i.e. your opponent should recognize that you play C or D (clarity is often absent in situations with many players – e.g. if you save energy nobody will probably notice it.) Based on the results of the tournament, Axelrod formulates some principles for a successful strategy, i.e. a strategy that yields cooperation with a high probability. Axelrod’s “principles” and theory

Opp, Norms and Institutions101 Cooperation is possible without a central authority!!! Implication:

Opp, Norms and Institutions102 Axelrod refers to pairs of players, i.e. dyads (two-person game theory). The theory could thus be formulated more generally: if a player never defects first (“nice”), if a player defects only once after the defection of the opponent (“forgiving”), if a player defects immediately after the defection of the opponent (“provocable”), if the opponent perceives the reaction of a player, then cooperation emerges between the players. If there are two players who interact: Consequence: if cooperation is to be predicted in a large group, the overall cooperation rate depends on what happens among dyads. (This is actually how Axelrod proceeds!)

Opp, Norms and Institutions103 An even more general formulation could read: the more often a player – in an encounter with another player – begins with C and defects only once after the defection of the opponent (“nice,” “forgiving”), the more often a player defects immediately after the defection of an opponent (“provocable”), the clearer an opponent perceives the reaction of a player, the more likely the players in the group will cooperate. If there is a group of players:

Opp, Norms and Institutions104 Illustrations – is the theory always correct? FOR TIME LIMITATIONS – HOME WORK! As a memory aid: relevant is being NICE, FORGIVING, PROVOCABLE, CLEAR. Firms who want a long-lasting relationship with customers – but if the market is very large (globalization, EU): does crime pay? Customer (you) and a firm: you buy books (Amazon could defect). Axelrod: trench warfare during World War I. “Spontaneous” disarmament. Defection of player A occurs due to an error which A does not notice (e.g., A does not pay a bill …). Other player B defects. A thinks B is a cheater … (but here verbal communication could help – which is not included in Axelrod’s model!). Other examples?

Opp, Norms and Institutions105 Questions Isn’t the whole theory a purely logical exercise, a “tautology”? Can a computer tournament really generate a valid theory of cooperation?  The procedure is to “make assumptions about individuals and deduce consequences for the behavior of the entire system” (1984: 6). This is not a test but a derivation of a model (or of theorems). Of course, the model has to be tested empirically.  The background theory used to make predictions is a wide version of rational choice theory (18: no “rationality” assumed!)

Opp, Norms and Institutions106 Axelrod makes several assumptions (1984: 11-19):  there are interactions only between two players;  each player “is also assumed to recognize another player and to remember how the two of them have interacted so far” (thus: there is no change of names, and it does not happen that the same people set up new firms to cheat or dress up (sich verkleiden));  it is not possible to make enforceable threats or commitments”; CONTINUED NEXT SLIDE

Opp, Norms and Institutions107  there is no way to change the other players payoffs;  there is no verbal communication, the players can communicate only “through the sequence of their own behavior”;  the players may meet again (i.e. choices made today may influence choices of tomorrow);  there is no way to know what the other player will do on a given move, i.e. no reputation can develop;  there is no exit option (run away from the interaction);  the future maybe discounted (future is less important than the present: “the discount parameter must be large enough to make the future loom large”…15).  There are no norms (this is implicit in the formulation of the problem: only egoism is relevant). BUT: in his example of trench warfare Axelrod mentions “ethics” that is “new to the theory” ( 84) Thus, norms of cooperation enhance the likelihood of C.

Opp, Norms and Institutions108 How can these (too restrictive?) assumptions – or at least some of them – be integrated into a theory? The “assumptions” (all?) are conditions that increase or decrease cooperation. Thus, we could set up a causal model that includes at least some of these variables. Weakness of a causal model: processes are not modeled. This would be the next step – based on the variables of the model. However, a causal model is a useful first step for a dynamic model! Some variables could be scope conditions – such as that the model is restricted to two players (two-person PD).

Opp, Norms and Institutions109 Here is a preliminary list of factors that have a positive or negative effect on cooperation (indicated by a + or – sign after the factor). Let’s briefly browse through the list – you may improve it at home: Use of a nice strategy … + Number of past contacts remembered that resulted in cooperation (= frequency of interaction in the past) + Possibility to enforce contracts and promises + Possibility of verbal communication + Number of expected encounters in the future + Size of discount factor (“shadow of the future”) + Internalized fairness/cooperation norm + External negative sanctioning of peers in case of defection + Preexisting beliefs in regard to trust (“pessimism”/”optimism”) Interest in longstanding relationships + Likelihood and costs of finding other “attractive” partner -

Opp, Norms and Institutions110 Does Axelrod’s theory explain norms and institutions? There is no explanation of oughtness. Mechanism could be: what is becomes ought – see later. Yes, cooperation or defection are regular behaviors. Let’s check the different dimensions of the definition of norms/ Institutions: Norms are sometimes defined as regular behavior. Is there an explanation of regular behavior? Is oughtness explained – does cooperation become a norm or is cooperation a norm? There may be causal relationships between the independent variables – example: general beliefs about trust may change if the number of successful encounters in the past is high.

Opp, Norms and Institutions111 In TIT FOR TAT the choice of D after the partner’s D is a punishment of the partner – the expression “TIT FOR TAT” already suggests this: it means “repayment in kind, as for an injury; retaliation” (http://www.answers.com/topic/tit-for-tat. C/D is thus a regular behavior and in certain situations a sanction. If C/D is explained, then this implies the explanation of sanctioning. Is sanctioning explained? In what sense is sanctioning explained – remember the intention definition, reward definition, effects definition?

Opp, Norms and Institutions112 No! This question is addressed in the theory of externalities that will be discussed later! Under certain conditions widespread defection leads to institutions (systems of norms) that prevent defection. Example: Ebay, laws against pollution. Is the emergence of such institutions explained?

Opp, Norms and Institutions113 VI.3. The General Mechanism of Spontaneous Norm Emergence in Axelrod’s Theory The mechanism of norm emergence, based on Hobbes’s work was called transfer and centralization of rights (section V.3, slide 84). How could the process Axelrod outlines be described in a general way? Under what conditions does this process obtain? Two questions should be discussed in regard to Axelrod’s theory:

Opp, Norms and Institutions114 Cooperation through decentralized private interest (mutual) sanctioning Perhaps the mechanism could be called: (Is there a better label?) Question: what are the differences and commonalities between the two processes – which dimensions or properties do they have in common and which ones are different?

Opp, Norms and Institutions115 Are there other differences and commonalities? Possible differencesTransfer and centralization of rights (Hobbes) Cooperation through decentralized private interest (mutual) sanctioning (Axelrod) Transfer of rights and creation of central authority most beneficial +- Political entrepreneurs available for setting up an institution (including interest groups) +- Private sanctioning+ Who is sanctioned by whom? + There is only a private interest in preventing defection of one's partner -+ Externalities++ NOTE: the suggested causal model on slide 109 is not included because this is not explicitly Axelrod’s theory!

Opp, Norms and Institutions116 VI.4. References Hofstadter, Douglas R. 1983. "Metamagical Themas. Computer Tournaments of the Prisoner's Dilemma Suggest How Cooperation Evolves." Scientific American:14-20. (A very good summary of Axel- rod’s project.) Taylor, Michael. 1976. Anarchy and Cooperation. London & New York: Wiley. (He was the first who has shown that in in iterated PD cooperation is possible.) Axelrod, Robert. 1984. The Evolution of Cooperation. New York: Basic Books. This is a free software for the simulation of the Axelrod’s models (iterated PDs) which can be downloaded from: http://www.eckhartarnold.de/apppages/coopsim.html There is meanwhile a vast literature on cooperation!

Opp, Norms and Institutions117 VII. Resolving Disputes in Shasta County: Robert C. Ellicksons Theory of Spontaneous Norm Emergence A widely discussed attempt to explain spontaneous norm emergence is Robert C. Ellickson‘s explanation of how farmers in Shasta County (California) deal with the problem of trespassing livestock. Ellickson’s work is interesting because he uses the literature of several disciplines (jurisprudence, sociology, economics), he provides an empirical case to illustrate (test? generate?) his explanatory hypotheses, and he suggests a general hypothesis about norm emergence.

Opp, Norms and Institutions118 VII.1. The Setting of the Study: Shasta County Introduction Where is Shasta County? See the “A” in the following two maps: from maps.google.com First map: California with Shasta County Second map: a section of the first map The study was conducted in Shasta County (California) with extensive cattle industry. The problem Ellickson addresses is the trespassing of cattle to adjacent land.

Opp, Norms and Institutions121 Shasta County and its cattle industry Physical Environment Location at northern end of the four-hundred-mile-long Central Valley of California (see first map). Sacramento river divides the area (runs from Redding to Stockton, via Sacramento, along the main highway – on map). Redding is largest city. Mountain peaks lie around the valley. There is rain in the winter season, it is dry and hot in summer, the surrounding mountains block cooling wind. Short description in Ellickson 1998 – see references later. The following is based on this article.

Opp, Norms and Institutions122 16 % of the county is “land in farms,” no significant agriculture is possible (poor quality of land). The bulk of the agricultural land is unirrigated and used only as seasonal pasture for livestock – principally cattle, the county’s major agricultural product. Social Environment Most of the grassy plains and lower foothills remains divided into ranches. Half of the ranches are owned by families over several generations. Many recent settlers live on the cooler foothills and are retirees. There are further some ranchette owners who keep an animal or two as a hobby as neighbors.

Opp, Norms and Institutions123 Modes of cattle ranching Ellickson distinguishes two types of ranchers: the Traditionalists and the Modernists. let their cattle roam in unfenced mountain areas during the summer (severity of dry season requires large areas of land), lease large tracts of mountain forest in summer; in winter (after October) animals are returned to a base ranch at a lower elevation and feeded with hay. To reduce risk of livestock trespassing on contiguous lands leasehold boundaries are drawn to follow natural barriers. Traditionalists let their cattle roam in the mountains. Traditionalists

Opp, Norms and Institutions124 keep their livestock behind fences at all times and install ditches and sprinklers to irrigate base ranch pastures. “Members of both groups believe that the life of the cattleman is the best possible in western America” (55). Modernists Important: There were “open range” areas where a cattleman is not liable for trespass damages – in contrast to “closed-range” areas.

Opp, Norms and Institutions125 The problem of trespassing “Every landowner interviewed, including all thirteen ranchette owners, reported at least one instance in which his lands had been invaded by someone elses’s livestock.” “A victim’s vegetation is always at risk”; Victim’s fences are damaged. "cattle sometimes wander onto rural highways and ravage hay”; "rural residents fear trespasses by bulls" (56): they are heavy and they leave deep hoof marks and they are sometimes dangerous (56). In general: "Trespass incidents are minor irritations" (47). Nonetheless, trespassing was a problem and the question Ellickson addresses is: How was this problem solved in Shasta County?

Opp, Norms and Institutions126 Fencing Why not fence land? This would prevent trespassing. And there would be beneficial effects of fencing for owners of livestock: predators, rustlers, winter snows, and poisonous plants all pose potentially lethal threats to cattle roaming unfenced countryside” (54). Further, “a wandering cow will be impregnated by a bull of worthless pedigree” (54). Fencing would also avoid the costs of trespassing for the victims (owners of the land that is trespassed) mentioned before. Thus, trespassing is also problematic for cattle owners.

Opp, Norms and Institutions127 Costs of constructing and maintaining fences and renting fenced land “Barbed-wire fence has been the standard” – costs money! “In 1982, fenced land in the Northeastern Sector rented for about ten dollar per animal unit month, whereas unfenced land rented for about three dollars.” Periodic maintenance is necessary and costly because of trespassing hunters or deers that damage fences. Thus, fencing may not not be a general solution of the problems of trespassing because it is rather costly.

Opp, Norms and Institutions128 VII.2. The Resolution of Trespassing Disputes in Shasta County Do nothing! Ask those whose cattle trespass to take measures to avoid future incidents. If cattle continues to trespass you could sue the owners. Build fence. Kill animal, slaughter it, keep it and sell it... + other illegal measures (damage owner’s house...) – similar to Axelrod’s punishment by defection. Possible solutions Question: Assume your land is trespassed several times. What could and what would you do?

Opp, Norms and Institutions129 Even in closed-range areas the law was in general not applied! In addition, the law was largely unknown! Ellickson’s explanation is that there was an “overarching norm of cooperation among neighbors” (56). This was apparently inconsistent with appealing to authorities and applying the law. There are costs of going through the formal claims process. If suing is not a normal option there is no incentive to learn the law! (“Rational ignorance” – see Anthony Downs about information of voters about party programs). Norm against and aversion to hiring an attorney. “’Pride’ of being able to resolve their problems on their own.” How disputes were NOT settled in Shasta County and why

Opp, Norms and Institutions130 When is the law invoked in everyday conflicts? Thus: formal law is only invoked in particular situations. Examples for refraining from appealing to the law: Example: there are numerous lawsuits between neighbors. (Perhaps this is only a last resort after long “negotiation”?) Macaulay, Stewart. 1963. "Non-Contractual Relations in Business: A Preliminary Study." American Sociological Review 28:55-69. —. 1977. "Elegant Models, Empirical Pictures, and the Complexities of Contract." Law and Society Review 11:507-528. Firms whose aim is to collect debts...

Opp, Norms and Institutions131 How disputes WERE settled in Shasta County: informal norms and sanctions Disputes are solved by applying informal norms: Ellickson describes these norms of “neighborliness” in great detail, along with the sanctions applied if norms are violated. Again: “Most most rural residents are consciously committed to an overarching norm of cooperation among neighbors" (59). This implies: an owner of livestock is responsible for the acts of his animals, i.e. has to avoid trespassing.

Opp, Norms and Institutions132 The norm of “neighborliness” and applied sanctions imply, among other things: a rural resident should “lump” (schlucken) minor damage from isolated trespass incidents; the residents keep track of those minor losses in a mental account. “Eventually, the norms entitle him to act to remedy any imbalance” (see below). The response to such incidents is an “exchange of civilities”: one should notify the animal owner and help him in retrieving the stray stock. This is regarded as a service and not as a complaint.

Opp, Norms and Institutions133 There are few “deviants” who cause incidents that do not balance the informal accounts. There are four types of countermeasures to discipline deviants, that can be ordered according to seriousness (61):  self help retaliation,  reports to county authorities,  claims for compensation informally submitted without the help of attorneys,  formal legal claims to recover damages – as a last resort.

Opp, Norms and Institutions134 VII.3. What Could Be a General Explanation of the Dispute Solutions in Shasta County? What is to be explained or what could be explained? The “dispute solutions” are regular behaviors – one dimension of current norms definition. There are norms of how one should behave toward owners of trespassing animals (oughtness). There are sanctions that are typically applied and norms about sanctions: certain sanctions are adequate in certain situations. Thus, the “dispute solution” can be called an institution = system of rules.

Opp, Norms and Institutions135 It seems that this institution emerged spontaneously. How can the emergence of this institution be explained? Ellickson suggests “A Hypothesis of Welfare Maximizing Norms” (1991: chapter 10), viz. “that members of a close-knit group develop and maintain norms whose content serves to maximize the aggregate welfare that members obtain in their workaday affairs with one another” (1991: 167). Let us be more specific and formulate the conditions that exist in Shasta County and that could in general be causes for the institution of settling disputes. Problems?

Opp, Norms and Institutions136 Animal trespassing is an externality, i.e. costly for those whose land is trespassed. The costs of the externality are low and symmetric:  in general, trespass incidents “are minor irritations” (47).  most residents have animals (including dogs) and are causing as well as suffering damages through animals (= symmetric damages). There is a general rule about the severity of sanctioning: sanctions should match the perceived seriousness of the sanctioned behavior. E.g., killing a straying animal would be “inadequate.” Relevant features of the initial situation

Opp, Norms and Institutions137 There is an “overarching norm of cooperation” (56) – i.e. a pre-existing norm of cooperation. There are intense and multiplex relationships between neighbors: “They interact on water supply, controlled burns, fence repairs, social events, staffing the volunteer fire department and so on” (60). Why are such relationships relevant? In such a social structure there are extensive possibilities of sanctioning. E.g., a “deviant” will be sanctioned in different social contexts – which adds up to a relatively high total cost of sanctioning for the “deviant.” There is a strong “shadow of the future”: “most residents expect those interactions to continue far into the future” (60). There is thus also an interest in long-standing smooth interactions. These would be jeopardized for “deviants.”

Opp, Norms and Institutions138 Low costs of externalities Preexisting norms of cooperation and sanctioning Close social relationships (with interest in future interactions) Norm of “neigbor- liness” Kind of sanctioning (“exchange of civilities”) Summary (= reconstruction) of the – implicit – model: Informal settling of disputes Are other “arrows” or variables plausible?

Opp, Norms and Institutions139 VII.4. Some Notes on the Model What is the role of a central authority? Perhaps the role of the central authority is a looming sword in case of extreme deviance! What would happen if a central authority would not exist? In most cases law is not invoked so the disputes are resolved spontaneously. OR the ranchers would use agreed-upon retaliatory measures against extreme deviants – in case of a missing state? Thus, even if institutions emerge and work spontaneously, a central authority as a possible sanctioner might be a (necessary?) condition for the stability of a spontaneous order.

Opp, Norms and Institutions140 What is the difference to the Axelrod model? Could we extend the previous table: new column for Ellickson, new lines? What is the relevance of “old” properties? Possible differencesTransfer and centralization of rights (Hobbes) Cooperation through decentralized private interest (mutual) sanctioning (Axelrod) Transfer of rights and creation of central authority most beneficial +- Political entrepreneurs available for setting up an institution (including interest groups) +- Private sanctioning+ Who is sanctioned by whom? + There is only a private interest in preventing defection of one's partner -+ Externalities++

Opp, Norms and Institutions141 Here is a suggestion. Problems? Possible differencesHobbesAxelrodEllickson Transfer of rights and creation of central authority most beneficial +-- Political entrepreneurs available for setting up an institution (including interest groups) +-- Private sanctioning* +++ There is only a private interest in preventing defection of one's partner -+- Externalities+++ Preexisting norms of cooperation and sanctioning --+ Intense multiplex relationships (shadow of the future –> sanctioning possibilities) ??+ Verbal communication possible+-+ * Open question here is: who is sanctioned by whom? / ? means: variable is not in the model, but might be relevant

Opp, Norms and Institutions142 Could the model be applied to other types of settling disputes? BUT think of the many lawsuits about conflicts between neighbors! What about conflicts between neighbors in an apartment house or neighbors in neighborhoods with single-family homes. SEE VARIABLES IN PREVIOUS TABLE!

Opp, Norms and Institutions143 The mechanism described by Axelrod was called: This is actually the process in the Ellickson model as well, but other variables play a role as well such as internalized norms. Cooperation through decentralized private interest (mutual) sanctioning

Opp, Norms and Institutions144 VII.5. References —. 1986. "Of Coase and Cattle: Dispute Resolution among Neighbors in Shasta County." Stanford Law Review 38:623-687.—. 1989. "A Hypothesis of Wealth-Maximizing Norms: Evidence from the Waling Industry." Journal of Law, Economics, and Organization 5:83-97.—. 1991. Order without Law. How Neighbors Settle Disputes. Cambridge: Harvard University Press.—. 1998. "Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County." Pp. 46-76 in The New Institutionalism in Sociology, edited by Mary Brinton and Victor Nee. New York: Russell Sage Foundation.—. 2001. "The Evolution of Social Norms: A Perspective From the Legal Academy." Pp. 35-75 in Social Norms, edited by Michael Hechter and Karl-Dieter Opp. New York: Russell Sage Foundation.—. 1986. "Of Coase and Cattle: Dispute Resolution among Neighbors in Shasta County." Stanford Law Review 38:623-687.—. 1989. "A Hypothesis of Wealth-Maximizing Norms: Evidence from the Waling Industry." Journal of Law, Economics, and Organization 5:83-97.—. 1991. Order without Law. How Neighbors Settle Disputes. Cambridge: Harvard University Press.—. 1998. "Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County." Pp. 46-76 in The New Institutionalism in Sociology, edited by Mary Brinton and Victor Nee. New York: Russell Sage Foundation.—. 2001. "The Evolution of Social Norms: A Perspective From the Legal Academy." Pp. 35-75 in Social Norms, edited by Michael Hechter and Karl-Dieter Opp. New York: Russell Sage Foundation. Ellickson, Robert C. 1986. "Of Coase and Cattle: Dispute Resolution among Neighbors in Shasta County." Stanford Law Review 38:623-687. —. 1989. "A Hypothesis of Wealth-Maximizing Norms: Evidence from the Waling Industry." Journal of Law, Economics, and Organization 5:83-97. —. 1991. Order without Law. How Neighbors Settle Disputes. Cambridge: Harvard University Press. —. 1998. "Of Coase and Cattle: Dispute Resolution Among Neighbors in Shasta County." Pp. 46-76 in The New Institutionalism in Sociology, edited by Mary Brinton and Victor Nee. New York: Russell Sage Foundation. —. 2001. "The Evolution of Social Norms: A Perspective From the Legal Academy." Pp. 35-75 in Social Norms, edited by Michael Hechter and Karl-Dieter Opp. New York: Russell Sage Foundation.

Opp, Norms and Institutions145 VIII. Resolving Coordination Problems: The Origins of Conventions There is one type of norm that can be characterized in the following way – take as an example driving on the right: There is no intrinsic value of a norm, i.e. it is not morally important or “right” to do what the norm demands. Thus, the norm is only useful. Other norms would work as well (or almost as well), i.e. another norm may be a little better or worse (such as driving on the left.) Whatever the norm is: it is only useful to a group if all group members adhere to the norm (like driving on the right). There are cognitive expectations that everybody follows the norm. Individual members who violate the norm incur costs (try to drive on the right in Great Britain!). I.e. the norm is self-enforcing. VIII.1. Introduction

Opp, Norms and Institutions146 This situation can be presented as a game – take “driving on the right” as an example: What could a matrix look like? Person(s) A Person(s) B (or: all others) Driving on the right Driving on the left Driving on the right3, 30, 0 Driving on the left0, 03, 3 There are two equilibria; There are only two options – there may be many more (e.g.: driving in the middle of a road! – why is this never taken as a third alternative in the standard example?). Note:

Opp, Norms and Institutions147 Other examples? Measurement units (meter vs. inches/feet/yards) – perhaps meters are easier to use and, thus, one combination of behavioral options has higher payoffs than another one; DIN norms, kind of language one uses, numeral systems, e.g. Arabic or Roman, keyboards, e.g. QWERTY or MALTRON keyboard (see http://en.wikipedia.org/wiki/QWERTY), http://en.wikipedia.org/wiki/QWERTY street signs may be different (for one-way streets, stop signs etc.), marriage “is a coordination equilibrium” (Mackie 1996: 1007) - ??. Here are the characteristics of the norm again: No intrinsic value, other norms work (almost) as well, general conformity important for members of a group, expectations of general conformity, self-enforcement. More examples in Lewis 1969: 5-8, Schelling 1978: 119-124.

Opp, Norms and Institutions148 VIII.2. What is a Convention? There are different definitions in the literature. Ullmann-Margalit 1977: 78: “Coordination problems are... situations involving two or more persons, in which each has to choose one from among several alternative actions, and in which the outcome of any person’s action depends upon the action chosen by each of the others. So that the best choice for each depends upon what he expects the others to do, knowing that each of the others is trying to guess what he is likely to do.” A choice of one alternative would thus be a convention. Young 1996: 105: “... we may define a convention as an equilibrium that everyone expects in interactions that have more than one equilibrium.”

Opp, Norms and Institutions149 Mackie 1996: 1007: “Any game with two or more proper coordination equilibria represents a coordination problem.” A convention is thus the equilibrium option chosen. Lewis 1969: 42: “Our first, rough, definition is: A regularity R in the behavior of members of a population P when they are agents in a recurrent situation S is a convention if and only if, in any instance of S among members of P, (1) everyone conforms to R; (2) everyone expects everyone else to conform to R; (3) everyone prefers to conform to R on condition that the others do, since S is a coordination problem and uniform conformity to R is a proper coordination equilibrium in S. Question (for home work): which of the following games describe coordination problems (i.e. games with two equilibria): battle of the sexes? Chicken game? Assurance game? Other games?

Opp, Norms and Institutions150 What is the “best” definition? No author gives detailed reasons why he or she chooses the definition that is chosen! It seems that the authors have the examples mentioned in mind and try to find a definition that describes these examples. Consequence of the definition: explaining conventions would mean to explain a complex set of phenomena – see, e.g. the definition by Lewis – with one stroke! It would be preferable to have a simple definition – such as one dimension and use the others as dependent or independent variables – see our previous discussion of the norms concept.

Opp, Norms and Institutions151 Suggestion – similar to Mackie’s definition: A coordination problem is defined as a situation in which at least to actors have at least two options and where at least two equilibria exist. A convention is the equilibrium that is chosen by the actors. Other characteristics in the previous definition could then be explained, e.g.: When do cognitive and normative expectations emerge that every one chooses behavior B? When is a behavior self-enforcing? When does a convention spread, i.e. is more or less frequently accepted by the members of a group? It seems more fruitful and interesting to explain these phenomena than including them in a definition!

Opp, Norms and Institutions152 VIII.3. Are Conventions Norms? Criterion “behavioral regularity”? Conventions are norms. Criterion “sanctioning”? Costs deviation from regularity = sanctioning according to the rewards definition. Criterion “oughtness”: to what extent is there internalization – bad conscience in case of violation? Example of footbinding or infibulation? E.g., assume there is no traffic, no police, no other person at a pedestrian crossing: do people have a bad conscience if they jaywalk? Criterion external “normative expectations”? Conventions are norms.

Opp, Norms and Institutions153 Sugden (1989: 95) argues that a convention (in the sense of an established pattern of behavior) “can” become a norm: “people can come to believe that they ought to act in ways that maintain these patterns: conventions can become norms.” Thus, some conventions are and some are not norms!

Opp, Norms and Institutions154 VIII.4. Examples for the Origin of Conventions Example 1: The Invention of the QWERTY keyboard http://en.wikipedia.org/wiki/QWERTYhttp://en.wikipedia.org/wiki/QWERTY: “The QWERTY keyboard layout was devised and created in the early 1870s by Christopher Sholes, a newspaper editorChristopher Sholesnewspaper and printer who lived in Milwaukee.... In 1873 Sholes' backer,Milwaukee James DensmoreJames Densmore, succeeded in selling manufacturing rights for the Sholes-Glidden "Type Writer" with E. Remington and Sons,E. Remington and Sons and within a few months the keyboard layout was finalised by Remington's mechanics” (bold print not in the original). Note: there is a debate about whether QWERTY is most efficient.

Opp, Norms and Institutions155 Example 2: Driving on the Right or Left Side by Decree or Spontaneous Emergence France: “Following the French Revolution... it was decreed that horse-drawn carriages in Paris should keep to the right. The previous custom had been for carriages to keep left and for pedestrians to keep right, facing the oncoming traffic. Changing the custom was symbolic of the new order: going on the left had become politically incorrect because it was identified with the privileged classes; going on the right was the habit of the common man and therefore more ‘democratic’” (Young 1996: 106, bold print not in the original). Britain: “In Britain, by contrast, there seems to have been no single defining event that gave rise to the dominant convention of left-hand driving. Rather, it grew up by local custom, spreading from one region to another” (Young 1996: 106, bold print not in the original).

Opp, Norms and Institutions156 Sweden: In continental Europe only Sweden was driving on the left. In 1967, Sweden changed to driving on the right by law. See the section “Rules of the Road” in Young 1996, and http://en.wikipedia.org/wiki/Right-_and_left-hand_traffic Conclusion Conventions may originate spontaneously or by design.

Opp, Norms and Institutions157 (1) There is repeated interaction and a coordination problem; (2) by chance, one alternative action becomes more often practiced; (3) the more often an alternative is chosen, relative to others, the stronger are the incentives to practice it (positive feedback loop); (4) a cumulative process emerges that finally leads to a widespread behavior; (5) there are no incentives to deviate from this practice, i.e. the practice is self-enforcing. Vanberg (1986. 92-93) describes such a process in the following way (see also Young 1996): VIII.5. How Can Conventions Emerge Spontaneously? The mechanism could be called “gradual accretion by precedent” (Young 1996: 106) or cumulative dispersion of norms by precedent.

Opp, Norms and Institutions158 Questions Step 2: (= by chance, one alternative is practiced more often): do actors really decide by chance – do they throw a coin? Example 1: “two horse-drawn carriages are rapidly approaching one another from opposite direction” (Young 1996: 107). Assume there is no rule of driving right or left. What will happen? Signaling (hand sign or call) – what will be accepted? Both stop, talk to each other and collectively decide: what will be the outcome? Perhaps the alternative that is first suggested will be accepted? Do the actors throw a coin? Example 2: Assume there is no tape measure and you want to buy fabric of a certain length and width at a shop. What will happen?

Opp, Norms and Institutions159 existing resources (knowledge of local language if carriages meet), pre-existing norms (path dependence – see later): existing rules of language in abbreviations. First step seems to be that someone makes a suggestion that is accepted immediately (low-cost situation) – sort of first come first served! Example 3: Language change: American abbreviations: 4you, Xing, gender-neutral style (she/he or only she), University of Washington becomes YouDub (in German: JuDab). Such suggestions are activities and thus depend on incentives. Possible incentives are:

Opp, Norms and Institutions160 Questions Could inventions (QWERTY) or the activities of “normative entrepreneurs” be integrated into the model? They could enter in step 2 – “by chance, one alternative becomes more often practiced”: inventions or mobilizing activities acto to spread information about a convention. Is it possible that DIFFERENT behaviors in a given group emerge and remain stable? See VHS and BETA, but APPLE and MICROSOFT, Internet BROWSERS (Explorer, Firefox). See further: local dialects, local foods, different manners..., WordPerfect... Are these conventions? Two equilibria... (perhaps for different groups of people...?) How can these differences be explained? Some brainstorming! Costs...

Opp, Norms and Institutions161 Are all conventions self-enforcing – like driving on the right – or are there degrees of self-enforcement? Language (to some extent one can understand different dialects) Internet browsers – Mozilla, Internet Explorer etc. Local foods Traffic signs like stop signs (see the huge number of traffic accidents). Thus, it is of interest to explain the extent of self-enforcement. Are externalities relevant for the emergence of conventions? A coordination problem is an externality. E.g., if one drives on the right the other on the left, an externality emerges.

Opp, Norms and Institutions162 VIII.6. The Emergence of Conventions by Human Design and by Spontaneous Action A convention is said to arise by “human design” if it is decreed by law or similar devices of a central authority. See the example of driving on the right in France and Sweden. When will a state (or politicians) intervene and take initiative to issue a law? There are relatively costly (how much?) externalities (driving on the left in Sweden was costly...), there is no spontaneous emergence of a convention (or of a “desirable” convention); a central authority can gain political support by imposing a convention.

Opp, Norms and Institutions163 VIII.7. Mixed mechanisms Young 1996: 106: Often there are informal processes of accretion, and codification into law follows later. Examples? Language: Orthography reform in Germany: Language develops spontaneously. But then the state issues a “reform” which changes the “spontaneous order.” Why? E.g. “Inconsistent” writing was regarded as a problem – by whom? I.e. spontaneous emergence was regarded as unsatisfactory.

Opp, Norms and Institutions164 Are there situations where there is a need for coordination but no convention (or norm)? Assume, there is a narrow door and only one person can pass, but two persons want to pass – a very frequent situation. Who gives way? Why is there no convention? VIII.8. Possible Falsifications: Coordination Problems Without Coordination?

Opp, Norms and Institutions165 VIII.9. What Is the Difference Between the Process of the Cumulative Dispersion of Norms by Precedent and the Other Mechanisms? Let us extend the “master table” by one column for this spontaneous process (not for the decree of conventions) and check how to complement the table.

Opp, Norms and Institutions166 Possible differencesHobbesAxelrodEllicksonConven- tions Transfer of rights and creation of central authority most beneficial +-- Political entrepreneurs available for setting up an institution (including interest groups) +-- Private sanctioning+++ There is only a private interest in preventing defection of one's partner -+- Externalities+++ Preexisting norms of cooperation and sanctioning--+ Intense multiplex relationships (shadow of the future –> sanction possibilities) ??+ Verbal communication possible+-+

Opp, Norms and Institutions167 Possible differencesHobbesAxelrodEllicksonConven- tions Transfer of rights and creation of central authority most beneficial +--- Political entrepreneurs available for setting up an institution (including interest groups) / "normative" entrepreneurs for conventions +--? Private sanctioning / self-enforcement for conventions +*++? There is only a private interest in preventing defection of one's partner -+-- Externalities++++ Preexisting norms of cooperation and sanctioning --+? Intense multiplex relationships (shadow of the future –> sanction possibilities) / repeated interactions for conventions ??+? Verbal communication possible+-++ * Open question here is: who is sanctioned by whom? / ? means: variable is not in the model, but might be relevant Here is my table:

Opp, Norms and Institutions168 Lewis, David. 1969. Convention. A Philosophical Study. Cambridge: Harvard University Press. Mackie, Gerry. 1996. "Ending Footbinding and Infibulation: A Convention Account." American Sociological Review 61:999-1017. Schelling, Thomas C. 1978. Micromotives and Macrobehavior. New York & London: W.W. Morton and Company. Sugden, Robert. 1989. "Spontaneous Order." Jorunal of Economic Perspectives 3:85-97. Ullmann-Margalit, Edna. 1977. The Emergence of Norms. Oxford: Clarendon Press, 74-133. Vanberg, Viktor. 1986. "Spontaneous Market Order and Social Rules. A Critical Examination of F.A. Hayek's Theory of Cultural Evolution." Economics and Philosophy 2:75-100. Young, H. Peyton. 1996. "The Economics of Convention." Journal of Economic Perspectives 10:105-122. VIII.10. References

Opp, Norms and Institutions169 IX. Externalities and Second-Order Public Goods: Norms as Solutions of Collective Action Problems In all situations discussed so far externalities were a condition for the emergence of norms. There are two theories that explicitly address the question of when externalities generate norms: the theories by Harold Demsetz (1967) and James S. Coleman (1990a, 1990b) Both theories will be presented and discussed in this section.

Opp, Norms and Institutions170 IX.1. The Theory of Harold Demsetz Demsetz defines property rights in the following way: They “are an instrument of society and derive their significance from the fact that they help a man form those expectations which he can reasonably hold in his dealings with others. These expectations find expression in the laws, customs, and mores of a society. An owner of property rights possesses the consent of fellowmen to allow him to act in particular ways. An owner expects the community to prevent others from interfering with his actions, provided that these actions are not prohibited in the specifications of his rights.... property rights specify how persons may be benefitted and harmed and, therefore, who must pay whom to modify the actions taken by persons” (347 – emphases not in the original). Basic concepts Perhaps skip this section. Continue 183.

Opp, Norms and Institutions171 “’Property rights’ are understood as the sanctioned behavioral relations among men that arise from the existence of goods and pertain to their use. These relations specify the norms of the behavior with respect to goods that each and every person must observe in his daily interaction with other persons, or bear the cost of non-observance. The term ‘good’ is used here for anything that yields utility or satisfaction to a person” (emphases in the original). In other words, “property rights” are norms in the sense of oughtness and sanctioning. As the authors state, “property rights” include “rights over material things (to sell my typewriter) as well as ‘human’ rights (the right to vote, to publish, etc.).” Furubotn and Pejovich suggest the following definition (1974: 3):

Opp, Norms and Institutions172 Two other concepts: Externalities are behaviors of (individual or collective) actors that are costly or beneficial to other actors and do not bear on the decisions of the former actors. Examples: firm pollutes river without paying for this, theft, noise, shopping center that is built next to a building and increases prices of property and there is no compensation to the shopping center; bees of a neighbor fertilize his or her flowers and there is no compensation to the bee owner. Thus, there are positive and negative externalities. Important: externalities in this definition presuppose that the costs and benefits are not borne by the actors. In other definitions this latter fact is irrelevant. Thus, an externality is given if actors cause costs or benefits to other actors.

Opp, Norms and Institutions173 Internalization of an externality means that the costs of an action are borne by those who cause them and the benefits accrue to those who cause them. Thus, costs and benefits become “internal” to those who cause them. Note: do not confuse this concept with the sociological concept of internalization (following a norm becomes an intrinsic motive).

Opp, Norms and Institutions174 The theory Actors who cause positive externalities have an interest to be compensated. The victims of soot from smoke are interested to stop pollution Actors affected by negative externalities have an interest to reduce or eliminate them. The TV station whose talk masters get much money from advertising is interested to get some portion of the money because they made the talk master attractive. There is thus an interest in internalizing external effects. NOTE: Those who profit from a positive externality have an interest that it remains, without paying for it! But this interest is not addressed by the theory!

Opp, Norms and Institutions175 “A primary function of property rights is that of guiding incentives to achieve a greater internalization of externalities” (348 – emphasis not in the original). E.g., if the residents living close to a factory have the right to be free of smoke they could prevent the firm from polluting and the externality would be internalized (the firm would bear the costs of pollution). If the TV station had a right to force the talkmaster to transfer some of his/her earnings from advertisements to the station, the positive externality would be internalized. However, from the critique of functionalism we know: a positive function of a norm (or some other phenomenon) does not mean that the norm emerges. The question thus is: When do property rights that reduce externalities emerge?

Opp, Norms and Institutions176 Demsetz theory reads: “... property rights develop to internalize externalities when the gains of internalization become larger than the cost of internalization” (350). Not clear: what means “... to internalize...”? Suggestion: Actors create property rights with the goal to internalize externalities if the gains of internalization are larger than the costs of internalization. Examples – according to Demsetz – that support his hypothesis: the development of air rights, renters’ rights, rules for liability in automobile accidents, the development of private property rights in the land among American Indians (based on Leacock 1954). In all these cases – so Demsetz – externalities were internalized.

Opp, Norms and Institutions177 The latter example refers to the Indians of the Labrador Peninsula (Canada) at the beginning of the 18th century. Here is the example of Leacock – as a causal diagram (Opp 1983: 65) It is an intuitively plausible illustration of the theory (for a discussion see Eggertsson 1990: 250-280.)

Opp, Norms and Institutions178 No private property in game and land Large stock of game Little hunting (only for private use) Low value of an animal No internalization Gains of internalization low Commercial fur trade arises Increase of value of animals Increase of hunting Higher external effects Gains of internalization higher than costs Property rights in land Initial situation:

Opp, Norms and Institutions179 Problems of the theory How do new property rights emerge: spontaneously (e.g. by negotiation, marking land as the Labrador Indians did) or by design (who sets the rules in what way)? What kinds of property rights emerge? Common property, individual property – see the great variety of rules about the use of natural resources in Ostrom 1990.  Idea: expected (and not real) payoffs are relevant – that may lead to “inefficient” norms! Does the theory hold for norms in general: table manners, non-smoking norm?

Opp, Norms and Institutions180 Is oughtness explained? Empirical evidence in regard to Leacock’s example: Eggertsson mentions historians claiming that the beaver populations were sharply reduced after introduction of the fur trade. According to Demsetz, the beaver population should have stabilized or increased due to the introduction of property rights (correct?). Free-riding is not considered (see later). Perhaps this is included in the costs of internalization (example: many residents of a city are affected by the pollution of many factories...). The political process (influence of interest groups etc.) is not modeled. (See previous point: the mechanism of norm emergence is not described.) Eggertsson (1990: 249-280) calls the theory the “naive” theory of property rights that can nonetheless be applied to certain situations – he mentions the three previous points.

Opp, Norms and Institutions181 Note: the differences between Demsetz and the previous models are discussed after Coleman – which is an extension of Demsetz’s theory.

Opp, Norms and Institutions182 IX.2. The Theory of James S. Coleman See Coleman 1990a and 1990b (references at the end of section 10). The following references refer to Coleman 1990a. Coleman intends to explain social norms: “They specify what actions are regarded by a set of persons as proper or correct, or what actions are improper or incorrect” (37). NOTE: This is the oughtness-definition. Coleman uses the following explanatory strategy. The first question he addresses is the explanation of the demand for norms. In a second step he tries to explain the realization of norms.

Opp, Norms and Institutions183 Conditions for the demand for norms The first “principle” reads: “... interests in a norm arise when an action has similar externalities for a set of others, when markets in rights of control of the action cannot easily be established, and when no single actor can profitably engage in an exchange to gain such rights” (42, emphases not in the original). In case of negative externalities (example: a non-smoker sits next to a smoker), the social problem is “how to limit the action (and how much to limit it) that is harming others (41).

Opp, Norms and Institutions184 In case of positive externalities (example: passers-by who benefit from the householder’s cleaning snow from his sidewalk), the problem is “how to encourage and increase the action” (41). In addition, from the perspective of the householder the interest is to get some compensation for his effort (41). Coleman emphasizes: externalities “create a basis, a demand for a norm on the part of those experiencing externalities” (42). There is thus no guarantee that a norm really emerges.

Opp, Norms and Institutions185 Comments Why is it necessary for the demand for a norm that there are similar externalities for a set of others? Perhaps the idea is that only if many persons are affected the joint interest generates processes (such as sanctioning) that lead to a joint interest? What is the meaning of “when markets in rights of control of the action cannot easily be established...”? It is possible that actors reduce externalities by “wholly individualistic means” (41): an actor who suffers from externalities may offer something to eliminate the externality. Thus, “rights of control” may be purchased. But this is not possible (=high transaction costs) if the externalities are widespread. The concept “externalities” is not defined. The examples suggest that externalities are actions that cause costs or benefits to third parties.

Opp, Norms and Institutions186 Question Do these conditions really suffice for generating a demand for (or interest in) a norm? In case of externalities that are regarded as minor, there is no interest in a norm. Examples: sometimes noise of my neighbor, noisy people in a train compartment, crying children, ringing cellphones in trains,... this is tolerated! Idea: only if externalities exceed a certain threshold an interest in (or demand for) a norm arises.

Opp, Norms and Institutions187 Conditions for the realization of norms Coleman’s “second principle” explaining the realization of norms is based on the theory of collective action (basic reference: Olson 1965). This theory addresses the question under what conditions a group acts in order to achieve its common goals. E.g. a community wishes to reduce pollution by a group of factories. When will the residents act to achieve this common goal? The common goal is a preference for a public good. This is defined as any good that, if it is provided, can be consumed by every member of a group. (There is thus no possibility of exclusion.)

Opp, Norms and Institutions188 Examples: the householder’s cleaning of the sidewalk provides a public good (as Coleman notes). Other examples: pollution, noise, overgrazing of the commons (Coleman 41) provide public goods with negative utility and are called public bads. The problem of providing a public good is that nobody can be excluded from its consumption. Therefore, there is an incentive to wait until others provide the good because, if it is provided, everyone can consume it. This is the free rider problem. As Olson argues, this problem is particularly salient in large groups if the single individual does not have an influence on providing the good. Example: participation in elections. Question: Are norms and laws public goods (or bads)? Yes!...

Opp, Norms and Institutions189 Question: What has all this to do with externalities? Coleman’s answer is that externalities are public goods or public bads. Therefore, the theory of collective action can be applied. Question: is this always the case, i.e. are there externalities which are not public goods? Pollution, noise, the householder’s cleaning the sidewalk are public goods. Effects in dyadic interactions: two persons sit at a table and one lights a cigarette – this is an externality that is not a public good! However, the major externalities are public goods or bads. For those kinds of externalities the theory can be applied.

Opp, Norms and Institutions190 Question: What has the realization of norms to do with externalities? Here is Coleman’s argument (in particular 52-53): A major condition for a contribution to the provision of a public good is to sanction contributors and non-contributors, i.e. to reward contributors and punish non-contributors. For example, if there is no incentive to do something against pollution, encouraging others to protest or to approach legislators and punish non-contributors will increase the likelihood of contributions. Sanctioning is a public good as well: If A sanctions B, then an effective sanction benefits all (52). (Thus, sanctioning generates externalities as well.) NOTE: sanctioning is a dimension of a norm.

Opp, Norms and Institutions191 The second-order public good – sanctioning – is instrumental to provide the first-order public good. There are thus two types of public goods: first-order public goods (such as pollution or cleaning the sidewalk) and second-order public good (sanctioning). Implication: the free rider problem holds for first-order as well as second-order public goods! If the second-order free rider problem can be solved, then this makes the solution of the first-order free rider problem more likely (but does not guarantee it – if the sanctions are not effective!).

Opp, Norms and Institutions192 Coleman suggests a solution of the second-order public goods problem – this is his “second principle” (53): Sanctioning becomes likely if there are close social relationships between the members of a group. Why? Idea: if – say – two persons are members of different groups, there are many possibilities to sanction. E.g., they (the potential beneficiaries of a norm) may decide to sanction jointly a third person to contribute. If A does not contribute, B and C may sanction A as a member of different groups. (see Ellickson!) Coleman’s causal model can be reconstructed in the following way (based on 1990a): “If there is a social relationship between actors,... then this overcomes the second-order free rider problem” (53).

Opp, Norms and Institutions193 From: seatNI_ExternaliCOLEMAN3.wpg Note: beneficiaries are those who profit from the “internalization” of an externality, whereas addressees (or targets) are those whose behavior is to be regulated (example pollution).

Opp, Norms and Institutions194 There are other plausible relationships between the variables, e.g.: all exogenous variables affect “realization of a norm”:

Opp, Norms and Institutions195 Problems of the theory Does the theory explain norms – in the sense defined by Coleman (=oughtness, see slide 186)?  Only if the empirical assumption is that sanctioning leads to a norm to participate. Can this be assumed? Do I sanction a friend (or a close acquaintance) more severely than somebody I do not know so well? What about “tolerance”? (Or does “sympathy” not exist in close social networks?) Thus, relationships provide the opportunity to sanction, but perhaps lowers frequency and intensity of sanctioning! Under what conditions do social relationships lead to more sanctioning?

Opp, Norms and Institutions196 Thus, B would be expected to invest time and money for an absolutely hopeless and futile cause! This would probably be the end of the friendship between the two persons. This will be particularly the case if the sanctioner A does not participate himself (hypocritical sanctioning – Heckathorn). Conclusion: Especially if sanctioning is badly needed for contributions to a public good – if the other incentives to contribute are very low – it seems that sanctioning is unlikely, it will provoke strong counter-reactions. Assume there is no chance that joint action of a group will provide the public good – e.g. students want a fixed income of 2000 € for every student per month. Would a person A encourage his friend B to become active for this cause?

Opp, Norms and Institutions197 Nonetheless, sanctioning is common in many situations where it is actually costly. It seems that there is some evolutionary basis of sanctioning. The basic idea is that in earlier times groups were small. In this situation, sanctioning and sanctioning norms (!) were likely to increase “fitness” or, in modern terms, were likely to contribute to the provision of the desired public goods for the group. Such a sanctioning trait may thus have become part of our genes and is transmitted to present day homo sapiens. And – perhaps – sanctioning is even accepted in situations where directly participating in the provision of a public good is not very promising.

Opp, Norms and Institutions198 For the contribution to the provision of public goods there are many other incentives, such as (for a summary see Opp 2009): intensity of public goods preferences AND perceived influence (which is often overestimated!), participation norms status gain in group by participating. Sanctioning is thus only one incentive for contributing!

Opp, Norms and Institutions199 Do norms emerge if there exist neither positive nor negative externalities? Did table manners, rules of politeness, norms of fashion, language emerge due to externalities? Table manners: lower classes imitate higher classes. Language: groups create special terms to be different (= creation of positive externalities for the group?). Fashion: firms create fashion to earn money! Or could one say there were externalities? (Lower classes suffered from not eating like the upper classes? The latter thus causes externalities?) Are there behaviors that cause costs and benefits? Perhaps: groups often want to create new positive externalities. This would be an extension of the theory!

Opp, Norms and Institutions200 What is the mechanism of norm emergence: if norms are realized, does this happen spontaneously or by design? General conclusion: Coleman’s “solution” is hardly convincing as a general explanation of social norms!

Opp, Norms and Institutions201 IX.3. How Are the Demsetz/Coleman Models Related to the Previous Models? Possible differencesHo.Ax.Ell.Con.Dem- setz Col. Transfer of rights and creation of central authority most beneficial +----- Political entrepreneurs available for setting up an institution (including interest groups) / "normative" entrepreneurs for conventions and for public goods provision +--??+ Private sanctioning / self-enforcement for conventions+*++?++ There is only a private interest in preventing defection of one's partner -+--?- Externalities++++++ Preexisting norms of cooperation and sanctioning--+?+? Intense multiplex relationships (shadow of the future –> sanction possibilities) / repeated interactions for conventions perhaps perhaps +?-+ Verbal communication possible+-++++ * Open question here is: who is sanctioned by whom? ? means: variable is not in the model, but might be relevant

Opp, Norms and Institutions202 IX.4. References Coleman, James S. 1990a. "The Emergence of Norms." Pp. 35-60 in Social Institutions. Their Emergence, Maintenance and Effects, edited by Michael Hechter, Karl-Dieter Opp, and Reinhard Wippler. New York: Aldine de Gruyter. Coleman, James S. 1990.b Foundations of Social Theory. Cambridge, Mass., and London: Belknap Press of Harvard University Press. Demsetz, Harold. 1967. "Toward a Theory of Property Rights." American Economic Review 57:347-359. Eggertsson, Thráinn. 1990. Economic Behavior and Institutions. Cambridge: Cambridge University Press. Furubotn, Eirik G., and Svetozar Pejovich. 1974. The Economics of Property Rights. Cambridge: Ballinger Publishing Company.

Opp, Norms and Institutions203 Horne, Christine. 2009. The Rewards of Punishment. A Relational Theory of Norm Enforcement. Stanford: Stanford University Press. Leacock, Eleanor. 1954. "The Montagnais "Hunting Territory" and the Fur Trade." American Anthropologist 56, No. 2, part 2, Memoir 78. Olson, Mancur. 1965. The Logic of Collective Action. Cambridge, Mass.: Harvard University Press. Opp, Karl-Dieter. 1983. Die Entstehung sozialer Normen. Ein Integrationsversuch soziologischer, sozialpsychologischer und ökonomischer Erklärungen. Tübingen: Mohr Siebeck. Opp, Karl-Dieter. 2009. Theories of Political Protest and Social Movements. A Multidisciplinary Introduction, Critique and Synthesis. London and New York: Routledge Ostrom, Elinor. 1990. Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press.

Opp, Norms and Institutions204 X. Private-Interest Sanctioning and the Emergence of Norms There are two types of situations. In the Coleman model  there was sanctioning in order to provide a first-order public good (= reduction of externalities) and a joint coordinated effort – see Coleman’s ideas about the importance of social networks.  There was thus a collective interest (i.e. not only a private interest) in norm formation. Perhaps skip. Continue 228 Are there situations where  there is sanctioning but no joint, coordinated effort to bring about a norm that reduces the externalities), and  there is only a private interest in being free of externalities?

Opp, Norms and Institutions205 preventing soot from smoke of several factories – Coleman model will hold (but: think of spontaneous bycott, if, e.g. the firms are all food factories?); establishing a non-smoking norm – Coleman model might not hold. Look at these examples: Characteristics of the situationSituation in Coleman model Alternative situation Sanctioning++ Joint effort to provide the first- order public good +- Collective interest+- What could be the mechanism of norm emergence in this alternative situation – let’s take the example of the non- smoking norm.

Opp, Norms and Institutions206 This section is based on: Opp, Karl-Dieter. 2002b. "When Do Norms Emerge by Human Design and When by the Unintended Consequences of Human Action? The Example of the No-Smoking Norm.“ Rationality & Society 14:131-158.

Opp, Norms and Institutions207 There are externalities in interaction situations, and the externality is caused by the partner in the interaction. Those affected by the externalities do not intend to create a general norm that reduces the externalities, but only wish to reduce the externality in the interaction situation. Individuals are able to control the externality at low costs. There are positive incentives to sanctioning (sanctioning smokers in order to avoid the harassment is often less costly than being exposed to the smoke). The mechanism applies to situations of the following type – let the example be exposure of non-smokers to smokers: X.1. Theory

Opp, Norms and Institutions208 The mechanism could be: Individuals who are exposed to an externality (such as smoke) utter statements demanding that the “perpetrator” should refrain from the behavior (negative verbal sanctions). The stronger the externality is, the more likely normative statements are uttered (oughtness is expressed). If this happens often to a perpetrator, the costs of continuing to impose externalities on others increase (stimulus generalization). Assumption: increased frequency of sanctioning raises the costs of performing the action disproportionally (logistic relationship) – but this assumption is not needed (although it seems plausible):

Opp, Norms and Institutions209 The behavior (smoking) will be performed less frequently. Smokers will acquire a negative attitude towards smoking (Fishbein-Ajzen Theory).

Opp, Norms and Institutions210 A positive attitude toward a non-smoking norm emerges as well, i.e. it is accepted that smoking in the presence of others is “not right” (again: Fishbein-Ajzen theory implies this – positive effects of following the norm...). Implication: the norm will be conditional – it will hold for the situations where it is sanctioned (discrimination learning). If the externality is strong, there is a demand for regulation. IMPORTANT: this implies that a strong informal norm will lead to incentives for politicians to engage in law-making – see later.

Opp, Norms and Institutions211 Role of social networks:.  Sanctioning smokers is not a “heroic” action, and smoking is not like a serious deviant behavior. Thus, sanctioning will not be a topic in everyday conversations, and one will not expect status if one reports sanctioning of smokers. Therefore, social networks will not be of major importance for sanctioning.  Effect of the externality on the kind of networks: one will choose networks with non-smokers. IMPLICATION: The norm is an unintended by-product of individual action that aims at achieving private goals.

Opp, Norms and Institutions212 Based on this mechanism I tested the following causal model:

Opp, Norms and Institutions213 Sample: 366 undergraduate students filled out a written questionnaire in introductory seminars (details in Opp 2002). X.2. A test of the theory Questionnaire items (examples): Number of friends who do not smoke: "Think of those people who are particularly important to you. How many of these people smoke?” (almost all, many, about half, few, nobody) Demand to prohibit smoking: Additive scale from the following items: (a) Smoking in the presence of nonsmokers should be prohibited; (b) it should be prohibited to smoke in public buildings. Possible answers from "fully disagree" (1) to "fully agree" (4).

Opp, Norms and Institutions214 Sanctioning of smokers: Additive scale from the following items: (a) I have ostentatiously cleared my throat and coughed; (b) I have talked to others about the disturbance so that the smoker could hear it; (3) I told smokers that they disturbed me; (4) I urged smokers to refrain from smoking. Answer categories: never (1), once (2), several times (3). Private non-smoking norm: Measurement by the factorial survey: SEE THE PREVIOUS SECTION ON MEASUREMENT. In two types of situations (restaurant, student party) it is ascertained to what extent smoking is more or less regarded as allowed or forbidden for different aspects of each type of the two situations. The acceptance of a private non-smoking norm is the average of all judgments of a given respondent. Here is again the slide we saw already (section “Factorial Survey).

Opp, Norms and Institutions215 Restaurant example: the following dimensions (i.e. variables) might be important for a no-smoking norm to hold in a restaurant (the values of the dimensions are put in parentheses) for a person P - the protagonist of the situation: Gender of P in a restaurant ((1) male, (2) female); Class of the restaurants ((1) Top class restaurant, (2) ordinary restaurant, (3) pub); Smoking rule ((1) no indication..., (2).. sign that it would be nice to refrain from smoking..., (3) sign that smoking is not allowed); Number of people in the restaurant who smoke ((1) No smoker; (2) one smoker; (3) several smokers; (4) most people smoke); Duration of stay in the restaurant ((1)... stays only for a short time to drink a beer. (2)... stays for some time to have a meal); Addiction of the person P in the restaurant: ((1)... smokes most of the time more than a package of cigarettes per day; (2)... smokes most of the time less than a package of cigarettes per day; (3)... is occasional smoker).

Opp, Norms and Institutions216 Example for a vignette: Mr. Müller goes to a restaurant. This is a top class restaurant in which smoking is prohibited. There is nobody in the restaurant who smokes. Mr. Müller stays only for a short time to drink a beer. He smokes most of the time more than a package of cigarettes per day. The respondents are presented with a rating scale with two extremes: they indicate to what extent it is not at all allowed to smoke (-3) and it is in any case allowed to smoke (+3). The other values were: -2, -1, +1, +2.

Opp, Norms and Institutions217 -3 -2+1+2+3 It is not at all allowed to smoke It is in any case allowed to smoke It is not allowed to smoke It is allowed to smoke Rating scale: Respondents are asked to rate each vignette on the following scale:

Opp, Norms and Institutions218 Table 2: Sanctioning Behavior: How Smokers and Non-Smokers Sanction Smokers Kinds of sanctionsPercentage of those who sanctioned at least once (in parentheses: average frequency of sanctioning) 1 Non-smokersOccasional smokers Less than 1 package daily More than 1 package daily All respondents (1) I have ostentatiously cleared my throat and coughed 53.5% (1.92) 36.2% (1.60) 19.4% (1.25) 4.0% (1.04) 40.6% (1.67) (2) I have talked to others about the disturbance so that the smoker could hear it 36.8% (1.59) 15.5% (1.21) 14.7% (1.18) 0.0% (1.00) 26.4% (1.41) (3) I told smokers that they disturbed me 79.3% (2.43) 56.9% (1.97) 46.2% (1.78) 28.0% (1.48) 65.7% (2.16) (4) I urged smokers to refrain from smoking 52.7% (1.91) 27.6% (1.50) 25.4% (1.45) 20.0% (1.36) 41.0% (1.72) N2 N2 200 58 67 25 351 1 Answer categories: never (1), once (2), several times (3). 2 N refers to the minimal number of respondents in the respective column. The means per item for non-smokers are significantly different from the value 1 (signifying no sanctioning) at least on the.0001 level.

Opp, Norms and Institutions219 ) Independent Variables (Vignette dimensions) Dependent variable: Acceptance of a non-smoking norm 1 RestaurantStudent party AllNon- smokers Smokers 1 AllNon- smokers Smokers 2 1234567 Gender (female).02.03.01-.02-.01-.02 Class of the restaurant -.04**-.06** -.01 No smoking in restaurant.55**.54**.63** No smoking at student party 3 : hosts request not to smoke.63**.59**.73** hosts tell they don't care about smoking.07**.09**.02 no statement by hosts, but it is known that they don't smoke.50**.53**.47** no statement by hosts, but it is known that they are smokers.04*.02.04* no statement.16**.20**.11** Number of smokers -.21**-.18**-.27**-.22**-.24**-.22** Duration of stay -.02 -.01 -.04-.05** -.02-.07** Actor in the vignette is occasional smoker.03**.05**.04.04**.01.10** Adjusted R 2.35**.33**.43**.48**.44**.62** * Significant at the.05 level; **significant at the.01 level, one-tailed tests. 1 The original rating scale (with high positive values indicating that smoking was allowed--see Table 3) was recoded so that high positive values indicate that smoking is not allowed, i.e. that a no-smoking norm is accepted. 2 Smokers are respondents who smoke at least one package of cigarettes per day. 3 The reference category is: the hosts tell that smoking is allowed. N, the number of judgments, is at least 3626 for all judgments, 2056 for non-smokers and 981 for smokers. Table 4: The Effects of the Vignette Dimensions on the Acceptance of a Non-Smoking Norm (Standardized Regression Coefficients) Notes on next slide.

Opp, Norms and Institutions220 * Significant at the.05 level; **significant at the.01 level, one-tailed tests. 1 The original rating scale (with high positive values indicating that smoking was allowed--see Table 3) was recoded so that high positive values indicate that smoking is not allowed, i.e. that a no-smoking norm is accepted. 2 Smokers are respondents who smoke at least one package of cigarettes per day. 3 The reference category is: the hosts tell that smoking is allowed. N, the number of judgments, is at least 3626 for all judgments, 2056 for non- smokers and 981 for smokers.

Opp, Norms and Institutions221 Table 6: Conditions for the Sanctioning of Smokers (Bivariate Correlations and Standardized Regression Coefficients) Independent VariablesDependent variable: Extent of Sanctioning rModel 1Model 2Model 3Model 4 Externality through smoking Smoking is disturbing.48**.23**.31** Smoking is no pleasure in life.36**.04 Passive smoking is not harmless, compared to other health risks.34**.11*.14** Passive smoking unhealthy.20**.02 Low intensity of smoking.43**.11 Composite scale.52**.38**.40** Number of friends who do not smoke.27**.007.02 Informal non-smoking norm.33**.009.03 Demand to prohibit smoking.44**.13*.16**.15*.17** Adjusted R 2.27**.26**.28** * Significant at the 0.05 level; **significant at the 0.01 Niveau, one-tailed tests. N is at least 301.

Opp, Norms and Institutions222 The test of the model

Opp, Norms and Institutions223 What could be the process of the emergence of a general non-smoking norm? In a period 1 smoking is accepted and non-smokers don’t care if they are exposed to smokers.  This is the situation in the 1950s and 1960s. Scientific research and media reports spread the view that active and passive smoking is dangerous for health. The costs of being exposed to smokers increase. The incentives of sanctioning smokers in interaction situations (including normative utterances that smoking is “bad”) as an instrumental act to stop the smoker and, thus sanctioning increase. The costs of smoking in interactions with smokers increase disproportionally. X.3. The process of norm emergence

Opp, Norms and Institutions224 Smoking decreases. Acceptance of a non-smoking norm increases (on the smokers’ side: dissonance of being sanctioned...). BUT smoking will not disappear – why?

Opp, Norms and Institutions225 X.4. What is the Difference to the Previous Models? Possible differencesHo.Ax.Ell.ConDeColSM Transfer of rights and creation of central authority most beneficial +------ Political entrepreneurs available for setting up an institution (including interest groups) / "normative" entrepreneurs for conventions and for public goods provision +--??+- Private sanctioning / self-enforcement for conventions /at low costs (smoking – only?) +*++?+++ There is only a private interest in preventing defection of one's partner -+--?-+ Externalities+++++++ Preexisting norms of cooperation and sanctioning--+?+?? Intense multiplex relationships (shadow of the future –> sanction possibilities) / repeated interactions for conventions perhaps perhaps +?-++ Verbal communication possible+-+++++ LAST COLUMN: SM for smoking norm. * Open question here is: who is sanctioned by whom? ? means: variable is not in the model, but might be relevant.

Opp, Norms and Institutions226 Does the process described hold for other norms – and not only the non-smoking norm? Noise of neighbors, if it is not too loud? Table manners? General question – for all the mechanisms dealt with before: can systems of norms be explained – like a constitution or a law? X.4. Questions Should there be a row in the table like “costs of organizing collective action”? However, these costs are always high in large groups. Why are there anti-smoking movements in the US? (http://www2.tobaccodocuments.org/pm/2503001914-1927.html)

Opp, Norms and Institutions227 XI. Other Mechanisms: Some Suggestions I will sketch some mechanisms that will not be discussed – for limitation of time. This is for your work at home! XI.1. The Is-Becomes-Ought Mechanism Example customary law (Gewohnheitsrecht): assume person P has crossed the land of his neighbor to catch the bus to work for several years. All of a sudden the neighbor’s new wife wants to forbid P to cross the premises. But P has acquired the right to cross the land. (see http://de.wikipedia.org/wiki/Gewohnheitsrecht).http://de.wikipedia.org/wiki/Gewohnheitsrecht Question: when does a behavioral regularity leads to a norm that one has a right or is entitled to perform the respective behavior?

Opp, Norms and Institutions228 The mechanism is: a behavior has been performed for some time; a norm develops that one should perform this behavior; if somebody wants to prevent the behavior he or she is sanctioned. A husband brings his wife regularly flowers – in general: somebody always gives a (big) present and then suddenly stops this (or gives smaller presents); a father takes his child regularly to the zoo and then stops it; a man regularly steals something if he buys in a shop, and then stops this; a person takes regularly route A to a bus and not route B, and then changes routes. High social welfare payments are cut (in general: state benefits are reduced). Examples:

Opp, Norms and Institutions229 Idea: might externalities be relevant? Stopping some activities generates externalities... Perhaps one of the previous models could be applied?

Opp, Norms and Institutions230 XI.2. Subversive Attenuation of Norms Assume there is a norm that has been followed for a long time. Then there is a slow “erosion” of the conformity to the norm until the norm no longer exists. Examples: Engagement (Verlobung): presents could be claimed back in case the couple splits up. Unfaithfulness of a married partner was punished if reported to the police. Pocket money paragraph in Germany: wife could only spend little amounts of money without permission of the husband. Otherwise the purchase was invalid. Other “outdated” norms: fashion, manners (children stand up for adults...)

Opp, Norms and Institutions231 At some point in time a norm is generally accepted (i.e. there is oughtness and sanctioning). Then an increasing number of people do not adhere to the norm. The norm attenuates and, finally, is no longer adhered to. The mechanism is: Why does non-adherence diminish oughtness?

Opp, Norms and Institutions232 Imitation, e.g. norms of the upper class are adopted by the lower class (table manners, fashion); internalization (norms become motives of their own – especially when children learn norms). There are two other mechanisms that focus on the spread of norms: Note: in the transmission process norms may change – see the norms of children and their parents. When are norms imitated and internalized, and to what extent do they change?

Opp, Norms and Institutions233 Businessmen make explicit contracts. In everyday life there are many implicit contract (mutual promises). The contracting parties generate a norm that holds only for the parties. When are norms “generalized,” i.e. adopted by the same partners for different contracts or by other parties? (See general business conditions – Allgemeine Geschäftsbedingungen.) See commercial code (Handelsgesetzbuch). What are the conditions for what kinds of contracts? See the vast literature in “law and economics.” XI.3. Norms by Contract Examples:

Opp, Norms and Institutions234 XII. The Origin of Norms by Design: Collective Norm Making Many norms and systems of norms (institutions) emerge by design, i.e. by collective decisions: a group of individuals (a parliament, a government, the board or the member assembly of a sports club) vote on some issue, according some decision rule like a simple majority rule, a qualified majority or unanimity. This decision is then implemented. How can such collective decisions about norms or institutions be explained? (I.e. when does “the group” choose rule A or B?) I will present some propositions. As an illustration I use: Riker, William H. 1995. "The Experience of Creating Institutions: The Framing of the United States Constitution." Pp. 121-144 in Explaining Social Institutions, edited by Jack Knight and Itai Sened. Ann Arbor: University of Michigan Press.

Opp, Norms and Institutions235 XII.1. Some Facts About the Creation of the American Constitution July 4, 1776: declaration of independence of the United States of America. “On September 17, 1787, the Constitution was completed in Philadelphia at the Federal Convention... The Convention submitted the Constitution to the Congress of the Confederation, where it received approval according to Article 13 of the Articles of Confederation.Congress of the ConfederationArticle 13 of the Articles of Confederation In March 4, 1789, the government under the Constitution began operations.” I.e. the US constitution went into effect. (http://en.wikipedia.org/wiki/United_States_Constitution)government Riker explains the voting of the Federal Convention in 1787.

Opp, Norms and Institutions236 XII.2. The Actors’ Goals The members of a group who want to make a collective decision have goals they want to achieve. The higher the intensity (or importance) of the goals, the more likely they determine the outcome of a vote. The lower the intensity of goals the more likely they are changed in negotiations. E.g., the goal that each single state in the US has a say in the decisions of the government, the goal of “checks and balances” were determinants of the votes of the members of the assembly.

Opp, Norms and Institutions237 To what extent are externalities relevant for the votes? Actors’ goals could be to remove or internalize negative or positive externalities of the population or of certain groups of the population (teachers...). Actors’ goals could be to create positive externalities.

Opp, Norms and Institutions238 This distribution of the goal intensities allows logrolling. Another condition for the outcome of a vote is the possibility of logrolling (Stimmentausch): is there a chance for “trade- offs” – I give up a less important goal if you vote for a more important goal of mine. If this is the case it is likely that goals of lower importance to the actors change so that a collective decision becomes more likely.

Opp, Norms and Institutions239 The outcome of a vote further depends on ideas about new rules that satisfy all (or the required number of) parties, i.e. on finding compromises. Compromises are often difficult to find. Often somebody has an idea after a long negotiation that is immediately accepted! This indicates that it is difficult to predict collective decisions!

Opp, Norms and Institutions240 XII.3. Beliefs About the Empirical Effects of Norms Actors will choose those norms that in their opinion realize their goals to the highest extent. There are thus beliefs about what kind of norms will have which empirical effects. Example: a decentralization of the school and university system in Germany (i.e. schools and universities are a matter of the “Länder”) was supposed to lead to competition between the states for “better” schools and universities. This was the belief after the Nazi rule. What happened? Thus, a vote for a norm will be likely if the norm is supposed to have relatively positive consequences (= externalities).

Opp, Norms and Institutions241 Among the empirical effects of creating a norm are also the effects on the support of those who make the norms. See political decisions before an election! Thus, two kinds of consequences can be distinguished: consequences for those for whom the norm is costly or beneficial (see scrap premium – Abwrackprämie – in Germany), pollution: those who benefit from a law diminishing pollution and those who have to bear costs; consequences for the support of the norm makers (extent to which the voters like the rule and to which the rule leads to higher support such as a higher number of votes for the party). What are the primary goals? Public choice theory: Common- good fiction! Politicians want support and re-election!

Opp, Norms and Institutions242 XII.4. Decision Rules as Major Constraints for Decision Outcomes The decision rule with the highest cost is unanimity (or a low blocking minority). Depending on the distribution of goals and their intensity only extensive bargaining leads to a joint decision, and perhaps no unanimity is ever achieved. A simple majority rule (more than 50% agreement to a vote determines the outcome) is less costly. Buchanan, James M., and Gordon Tullock. 1965. The Calculus of Consent. Logical Foundations of Constitutional Democracy. Ann Arbor: University of Michigan Press. Thus, the higher the required unanimity of a rule, the less likely a collective outcome will come about or the longer negotiations will last.

Opp, Norms and Institutions243 XII.5. The Influence of Predecessor-Institutions: the Role of Path-Dependence “... no institution is created de novo. Consequently, in any new institution one should expect to see hangovers from the past” (121). There is a vast number of constitutions that preceded the American one, such as those from the colonial governments or the Dutch Republic (from 1570 and still existing in 1787). What are the factors that influence the impact of pre-existing norms and institutions?

Opp, Norms and Institutions244 Those institutions influence a new institution that one had experienced personally (123), institutions that are “significant” for the framing (123), i.e. relevant for achieving the goals of the actors, accessibility (“no framer could read Dutch” – 124). In general: The actors’ goals and the accessibility of preexisting constitutions determine which constitution is considered and which single rules are used. Question: which constitution would the framers of the German constitution of 1949 (“Grundgessetz”) consider? What about the Nazi laws?

Opp, Norms and Institutions245 XII.6. What is the Difference to the Previous Models? Possible differencesHoAxEll.Co nve De mse Cole man Smo king Coll dec Transfer of rights and creation of central authority most beneficial / collective dec. change rights +------+ Political entrepreneurs available for setting up an institution (including interest groups) / "normative" entrepreneurs for conventions and for public goods provision / politicians for collective decisions +--??+-+ Private sanctioning / self-enforcement for conventions / at low costs (smoking) / not sufficient for collective decisions +*++?+++- There is only a private interest in preventing defection of one's partner -+--?-+- Externalities (or beliefs about consequences of norm – collective decision making) ++++++++ Preexisting norms of cooperation and sanctioning, including path dependence --+?+??+ Intense multiplex relationships (shadow of the future –> sanction possibilities) / repeated interactions for conventions per hap s per ha ps +?-++- Verbal communication possible+-++++++

Opp, Norms and Institutions246 Path dependence: was that included in previous theories? (Vast literature – see last section) Beliefs about the consequences of norms relevant – to be included under “externalities” – see big table. Important for all processes of norm emergence: Does centralized norm making suggest how in general systems of norms (= institutions) can be explained by the other “theories”? Will be discussed later – slide 275 ff. XII.7. Questions and Comments on the Table NOTE: collective decisions are explained by explaining individual behavior!

Opp, Norms and Institutions247 XIII. The Effects of Norms and Institutions So far the origin of norms was addressed. Most of the literature deals with the effects of norms. Thus, norms or institutions are regarded as given. This is the topic of this section. I will present some general propositions and some illustrations. Perhaps only general model 257

Opp, Norms and Institutions248 behavior  conformity to or violation of the norm  side effects (e.g. discriminatory effects of anti- discrimination laws); preferences or attitudes (e.g. toward the regulated behavior or toward the norm makers); cognitive beliefs (e.g. expectations about the regularity of the demanded or prohibited behavior); other norms/institutions (path dependence – see US constitution) change of the respective norm itself at a later time (feedback effects – e.g. if a norm does not work it may be changed). Norms and institutions may have effects on: XIII.1. The possible effects of norms and institutions

Opp, Norms and Institutions249 A necessary condition for norms to have any effect is that individuals recognize that a norm holds in a certain situation. It does not always happen that the norm is activated. See, with further references: Stroebe, Wolfgang. 2008. "Warum und wie beeinflussen Normen das Verhalten: Eine sozial-kognitive Analyse.“ Pp. 101-118 in Rational Choice: Theoretische Analysen und empirische Resultate. Festschrift für Karl-Dieter Opp zum 70. Geburtstag, edited by Andreas Diekman, Klaus Eichner, Peter Schmidt, and Thomas Voss. Wiesbaden: VS Verlag für Sozialwissenschaften. Intuitive example: it often happens in everyday life that one asks oneself: shouldn’t one have behaved in another way in a certain situation (e.g. apologized for a behavior...) In what follows I will concentrate on behavior which is most often addressed in the literature as well.

Opp, Norms and Institutions250 XIII.2. Which Theory Could and Should Be Applied to Explain the Effects of Norms or Institutions? Sociological role theory Biddle, Bruce J. 1986. "Recent Developments in Role Theory." Annual Review of Sociology 12:67-92. Biddle, Bruce J., and Edwin J. Thomas (Eds.). 1966. Role Theory: Concepts and Research. New York: Wiley. Symbolic interactionism Swidler, Ann. 1986. "Culture in Action: Symbols and Strategies." American Sociological Review 51:272-286. Methodological assumption: it is useful to apply a theory and not try ad hoc to explain effects of norms. Question then is: what theory could an should be applied?

Opp, Norms and Institutions251 Rational choice theory (RCT) Most of the literature applies this theory – difference between narrow and wide version. Basic problem: can norms/institutions be included as independent variables in RCT? This is controversial. see moralin.pap Elster, Jon. 1989b. "Social Norms and Economic Theory." Journal of Economic Perspectives 3:99-117. For the following see: Opp, Karl-Dieter. 1997. "Norms, Rationalizations and Collective Political Action. A Rational Choice Perspective." Swiss Journal of Economics and Statistics 133:241-274.

Opp, Norms and Institutions252 How do norms fit into rational choice theory? Internalized norms / acceptance of norms: these are preferences for following a norm, i.e. following a norm is intrinsically rewarding, deviation is costly (bad conscience, shame). Existing normative expectations of others: they are not costs or benefits per se, but only if others are reference persons (then they diminish the realization of goals such as having a good reputation in the opinion of the reference persons). Sanctions are reactions to norm conformity or deviations. They need not be costs or benefits – only if they reduce the realization of goals (then they are constraints). Do the norms dimensions refer to costs and benefits and, thus, can explain behavior?

Opp, Norms and Institutions253 Why could norms not fit into rational choice theory? Elster, Jon. 1989. "Social Norms and Economic Theory." Journal of Economic Perspectives 3:99. “Rational action is concerned with outcomes. Rationality says: If you want to achieve Y, do X. By contrast, I define social norms by the feature that they are not outcome-oriented. The simplest social norms are of the type: Do X, or: Don´t X. More complex norms say: If you do Y, then do X... Rationality is essentially conditional and future-oriented. Social norms are either unconditional or, if conditional, are not future-oriented” (underlining not in the original). Thus, there are two types of action: rational and normative action. Question: What do you think about this argument?

Opp, Norms and Institutions254 Critique of the argument: 1. Why define “rationality” in this way? What has this to do with rational choice theory? There are numerous other definitions of rationality. 2. Why are norms defined as not outcome-oriented? Instead of simply defining something, it should be analyzed whether a normative statement “if you do Y, then do X” is outcome- oriented. Of course, people follow or violate norms because this is beneficial or costly. In other words: following or violating norms has consequences – either in terms of external sanctions or in terms of internal reactions (shame etc.) or in terms of side effects (see before).

Opp, Norms and Institutions255 If an actor behaves in order to avoid internal sanctions he wishes to avoid certain consequences that are expected to occur in the future. Thus, the costs and benefits of following or violating norms occur in the future. In fact, ELSTER supports this analysis when he acknowledges that norms are “sustained by the feelings of embarrassment, anxiety, guilt and shame that a person suffers at the prospects of violating them. A person obeying a norm may also be propelled by positive emotions, like anger and indignation” (1989: 99-100). In other words, the “prospect” of norm violation is relevant for the decision to conform to or to violate a norm. 3. Is normative behavior not future-oriented? Thus, norms can be included as possible costs and benefits in a rational choice explanation!

Opp, Norms and Institutions256 XIII.3.The Basic Model for Explaining the Effects of Norms on Behavior Norms/institutions external to individual (if accepted or enforced, and known) Incentives (e.g. expectations about punishment) Internalized norms (including legitimacy beliefs) Other costs and benefits Behavior (individual conformity, side effects) Collective phenomena (conformity) (analytic or empirical relationship) Correlation effects on at least one of the three factors Example: rule of turning lights on all day in Chech Republic. Important: other factors may have an impact!

Opp, Norms and Institutions257 Comments The basic theoretical idea is that a change of norms and institutions affects incentives for individual action – but only under certain conditions, namely if norms are accepted or enforced. Norms/institutions are only one set of incentives that influence behavior – see the “other costs and benefits.” Depending on the situation norms may be more or less important. Example: exceeding speed limits if you are in a hurry and if you wish to enjoy the surroundings. The arrows to the independent variables indicate that other factors are relevant. I.e. there may be pre-existing internalized normative phenomena.

Opp, Norms and Institutions258 In contrast to the sociological role model the rational choice model can explain very detailed kinds of action, and can take into account not only norms as determinants of behavior.

Opp, Norms and Institutions259 XIII.4. Examples For the Effects of Norms The tragedy of the commons – private vs. common property Assume there is one large meadow and, say, 20 farmers. The meadow is common property. Effects: over-consumption (and destruction of the meadow), under-investment. Compare this with private property: each farmer gets a piece of land = private property. Effects: each has an incentive not to consume too much because he or she bears the costs if no grass grows. Investment pays: one can exclude third parties from consumption.

Opp, Norms and Institutions260 See Demsetz 1967. There are other possibilities to remove the problems of common property. E. Ostrom shows various ways how groups dealt with common pool resources. Ostrom, Elinor. 1990. Governing the Commons. The Evolution of Institutions for Collective Action. Cambridge: Cambridge University Press. The example illustrates: changes of property rights that are enforced change the incentives for various kinds of activities.

Opp, Norms and Institutions261 norms of language table manners rules of politeness traffic rules patents employment protection markets vs. central planning: incentives for producing according to consumer preferences, incentives for behavior of managers (act according to plan...), incentives for innovations... Numerous other examples show that norms provide incentives that affect behavior:

Opp, Norms and Institutions262 XIV. A Toolkit for Institutional Analysis Task is to explain the emergence, stability or change of certain norms or institutions. Question: what is an adequate procedure? In what follows I will suggest some “rules” of how to proceed. Note: the “rules” are not moral imperatives but technological statements: if you wish to achieve good explanations, do X. In what follows the phenomena to be explained are statements about what ought to be the case, sanctioning behavior (in the sense of a behavior that is intended to punish or reward conformity to or violation of a norm (= ought statement)), and behavior that conforms to or violates a norm. XIV.1. Explaining the ORIGIN of Norms and Institutions

Opp, Norms and Institutions263 The first step should be: Rule 1: Specify what you want to explain. In terms of “norms,” this could be change of acceptance of a statement that something ought or ought not to be the case; change of sanctioning behavior change of norm-related behavior – conformity to or violation of a norm.

Opp, Norms and Institutions264 Rule 2: Apply a theory referring to individual actors that is capable of accounting for the explanandum. Those who accept a norm or sanction or perform a norm-related behavior are individual actors. If collective norm making is the explanatory problem, one should look at the decisions of the individuals who make up the collective – see lawmaking and the section about collective norm making. It thus seems useful: Possible candidates for such a theory are a wide version of rational choice theory and other social psychological theories such as the Fishbein-Ajzen theory.

Opp, Norms and Institutions265 For an alternative qualitative approach see Swidler, Ann. 1986. "Culture in Action: Symbols and Strategies.“ American Sociological Review 51:272-286. Problem: low explanatory power! Explaining norm-related phenomena often involves two steps: How did the incentives of the actors change?  example of the non-smoking norm: costs of being exposed to smoking increased; or someone joins a new social network by moving to another place. Why did the incentives change?  example non-smoking norm: macro factors changed such as spread of scientific findings. In general: macro events are the relevant factors (see also Demsetz 1967: technological developments etc.)

Opp, Norms and Institutions266 Thus, explaining norms often means that there are some macro events that change incentives which lead to norm-related behavior. Consequently: Rule 3: Try to set up a micro-macro model. seatNI_HowToDoInstitutionalAnalysis.wpd Macro Norm/insti- changestution Change of norm-related incentives Individual behavior correlation

Opp, Norms and Institutions267 The models in the previous sections include a list of factors that may be relevant for explaining the emergence and effects of norms and institutions. See the “big tables” and the causal model in the section about Axelrod. Accordingly, a useful rule is: Rule 4: Check the relevance of the factors listed in the previous table. This includes “path dependence” – which is emphasized as a major factor in the recent literature.

Opp, Norms and Institutions268 Basic idea in regard to norms and institutions: past norms and institutions may determine what later norms and institutions look like. This is an orienting statement: we may use it as a heuristic rule: Rule 4a: If you explain norms and institutions, look at the effects of previous norms and institutions. Examples: QWERTY keyboard, US constitution (see before), language, table manners (general use of chopsticks unlikely in Germany). Notes on path dependence

Opp, Norms and Institutions269 Why could past norms/institutions affect later norms/institutions? Answer from a rational choice perspective: earlier norms/ institutions impose certain costs/benefits on the acceptance or adoption of later norms/institutions. There is a vast literature where these costs and benefits are spelled out for specific kinds of institutions that are to be explained. Rule 4b: If you explain norms and institutions, look at the costs and benefits that previous norms and institutions have on the norms and institutions to be explained.

Opp, Norms and Institutions270 NOTE 1: the extensive literature on path dependence is not a unified theory but a set of case studies with many orienting statements! NOTE 2: the idea of path dependence implies that norms/institutions need not be “efficient” (from a subjective or objective perspective): see QWERTY. Reason: costs of change to an “efficient” norm may be too high.

Opp, Norms and Institutions271 Some references on path dependence Arthur, Brian W. 1989. "Competing Technologies, Increasing Returns, and Lock-in by Historical Events." The Economic Journal 99:116-131. —. 1994. Increasing Returns and Path Dependence in the Economy. Ann Arbor: University of Michigan Press. Basic references are: Mahoney, James. 2000. "Path Dependence in Historical Sociology." Theory and Society 29:507-548. Pierson, Paul. 2004. Politics in Time: History, Institutions, and Political Analysis. Princeton: Princeton University Press. See further:

Opp, Norms and Institutions272 Critical junctures “Critical junctures are characterized by the adoption of a particular institutional arrangement from among two or more alternatives. These junctures are ‘critical’ because once a particular option is selected it becomes progressively more difficult to return to the initial point when multiple alternatives were still available” (Mahoney 2000: 513). This is again an orienting hypothesis which may be reformulated as a heuristic rule: Rule 4c: If you explain why norms and institutions do not change, examine whether the costs and benefits of change depend on previous changes of the norm/institutions. Example: change of the welfare state! Qwerty keyboard.

Opp, Norms and Institutions273 Rule 5: Try to model a process of norm emergence Explanations of institutions often follow a simple two-time cause and effect pattern. E.g.: what are the causes for the decline of smoking after the introduction of a non-smoking law? Many scholars are not satisfied with such short-term explanations. If there is a process where a norm or institution assumes the present shape after a longer time, it is useful to take a longer period into account: This may also include hypotheses about the effects of norms: a new law – lowering costs of health care – may lead to a strong demand for health services, which leads to a change of the law.

Opp, Norms and Institutions274 It was said before that institutions are systems of norms. Example: inheritance laws. Can such a system of norms be explained as a unified entity, i.e. is it possible to explain “the” institution as a whole, or is it necessary to explain the single norms an “institution” consists of? At one extreme, it is possible that a whole system of rules is preferred by a group of actors to a whole system of other rules. In this case “the” institution can be explained. Another extreme is that each single rule must be explained: each rule emerges separately due to different incentives. Explaining institutions as unified entities

Opp, Norms and Institutions275 Example: inheritance rights Beckert, Jens. 2004. Unverdientes Vermögen. Soziologie des Erbrechts. Frankfurt/New York: Campus. —. 2008. Inherited Wealth. Princeton: Princeton University Press. Beckert investigates the development of inheritance rights in Germany, France and the US. He does not explain “the” inheritance rights, but discusses four conflictual areas (“Konfliktfelder”): (1) the rights of a person to determine what happens with his wealth after his death, (2) the rights of the relatives of a bequeather (especially of the spouse and the children), (3) the goods that must remain in the family (“Fideikommisse”) and cannot be divided, and (4) the taxation of the heritage.

Opp, Norms and Institutions276 The following rule seems useful: Rule 6: In explaining institutions try to begin simple: check how each rule can be explained. Whether explaining an institution as a whole is useful must be decided during the explanation. These are again four complex sub-institutions (like taxation). The question arises, whether they have to be further broken down. This question can only be answered by looking at the case in detail. See, as another example, the explanation of the US constitution.

Opp, Norms and Institutions277 XIV.2. Explaining the EFFECTS of Norms and Institutions The “rules” are similar to those of explaining the origin of norms and institutions: Rule 1: Specify what the norms or institutions are whose effects are to be explained. Rule 2: Apply a theory referring to individual actors and specify which actors might be affected in what way by the norms or institutions.

Opp, Norms and Institutions278 Rule 3: Try to set up a micro-macro model – see the general model of the effects of norms on slide 259. Rule 4: Decide which dimensions of the norm concept are to be addressed – oughtness, sanctions, regular behavior. Rule 5: Try to model a process of the effects of norms and institutions.

Opp, Norms and Institutions279 XV. Summary: An Inventory of the Mechanisms of Norm Emergence In explaining norms or institutions one might make use of the mechanisms described before. The question could be to what extent these mechanisms can be applied. Further research is needed to specify the conditions when each of these mechanisms apply.

Opp, Norms and Institutions280 Here is a list of the mechanisms addressed before: transfer of rights to a central authority (Hobbes – 76); cooperation through decentralized private interest (mutual) sanctioning 102, 129 (Axelrod, Ellickson); cumulative dispersion of norms by precedent (conventions) 146; the creation of norms by collective action (Demsetz, Coleman) 149 ff.; norm emergence by private interest sanctioning (Opp) 195; the is-becomes-ought mechanism (212); subversive attenuation of norms (213); imitation (215); internalization (215) norms by contract collective norm making.

Opp, Norms and Institutions281 Questions: Are there more mechanisms? Are there other differences between these mechanisms?

Opp, Norms and Institutions282 This is the end! Thanks for your patience!

Opp, Norms and Institutions1 Norms and Institutions. Origins, Change and Effects Prof. Dr. Karl-Dieter Opp Universität Leipzig, Institut für Soziologie.

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Opp, Norms and Institutions1 Norms and Institutions. Origins, Change and Effects Prof. Dr. Karl-Dieter Opp Universität Leipzig, Institut für Soziologie.

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