Jesus, Hillel and the Man of the Street. Moral and Social Norms in Heterogeneous Populations

This paper studies how different behavioural norms affect the individual and social welfare in a population with heterogeneous preferences. We assume preferences are private information, and that interactions between individuals do not involve communication, nor bargaining. We first compare the so-called golden rules of Jesus (“do to your neighbours what you would like them do to you”) and Hillel (“don’t do to your neighbours what you would not like them do to you”). We consider them as an idealization of an imperative and a more liberal approach to social norms. We find that the aggregate welfare depends on the distribution of preferences in the society. In general, more polarized preferences lead to the supremacy of the Jesus rule, while the more liberal Hillel rule performs better when preferences are more dispersed in the society. We then introduce a third, more realistic behavioural rule, a “tit-for-tat” strategy that prescribes “do to your neighbours what they have done to you” (keeping the biblical parallel, a reminder of the “eye for eye, tooth for tooth” rule) . We show that when this strategy is followed by everybody it leads to the selection of a single behaviour, which becomes established as a social norm. This behaviour leads in general to more inequality, with respect to the Jesus or Hillel rules. However, it is sufficient that a small group (about 1%) of the population keeps on playing one of the two moral norms to recover the same social welfare that we obtained when everybody played that moral norm.