Wednesday, April 19, 2006

Where Do Conventions, Norms, and Beliefs Come From?

Answering this questions if obviously very complicated. Two papers from the Journal of Economic Perspectives provide a few insights into the process.

The first, "The Economics of Convention" discusses the evolution of conventions like driving on the left or right side of the road. That is, it describes how, out of a set of potential choices without an obvious preferred alternative, societies improve welfare by converging on one standard convention.

The second, "Learning from the Behavior of Others, Conformity, Fads, and Informational Cascades" presents a model for conformity which explains how fads arise.

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