Abstract

Peer sanctions are powerful mechanisms for enforcing social norms of cooperation that can mitigate social dilemmas, but they are often inefficiently costly, misdirected, and may be used by non-cooperators to undermine any cooperative attempts. For most real world problems, the socially optimal solution – such as number of fish harvested or work hours contributed to a common project – is not known by users, further questioning whether social norms alone can lead to an efficient outcome. Here, we develop a model of a community harvesting a joint resource whose members do neither know much extraction is socially optimal, nor know how much peer pressure is needed to correct behavior of peers. The model formalizes the idea that moral preferences change endogenously, but at a much slower rate than economic decisions. Surprisingly, we find that social dilemmas can be overcome efficiently if own behaviour is used as the moral demarcation line between good and bad behaviour, with peers gauging penalties and rewards accordingly. Sanctioning based on this simplistic moral code engenders cooperative behaviour even when the socially optimal exploitation level is unknown, sanctions are weak or costly, or individuals make mistakes. Unexpectedly, we find that sanctions are less efficient when not own, but average group behaviour is used as the moral yardstick. Thus, our findings may explain why social norms may evolve towards what is best for the group as, even if such social optimum is unknown.