Norms, Emotions, and Culture in Human Cooperation and Punishment: Theory and Evidence

We consider the psychological and social foundations of human contributions and punishments in social dilemma situations using a voluntary contributions mechanism with punishment (VCMP). We provide beliefs-based theoretical microfoundations, reliant on human emotions, for the inherent human tendency to follow social norms and punish norm violators, while respecting boundedly rational strategic decision making. The predictions are successfully tested with pre-registered experiments in China and the UK. The emotions of shame, frustration, and anger, that arise endogenously in our model, and are formally modelled through belief hierarchies, play a key role. Contributions to public goods are motivated by social norms of contributions; and punishments are induced through frustration/anger at non-contributors. We also show how theory might account for cross-cultural differences in behavior.