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Abstract

We study how cooperative behavior reacts to selective (favorable or unfavorable) pre-play information about the cooperativeness of other, unrelated groups within an experimental framework that is sufficiently rich for conflicting behavioral norms to emerge. We find that cooperation crucially depends on pre-play information, coinciding with a change in initial beliefs. Over time, behavior within both types of groups becomes increasingly homogeneous, indicating the formation of two rather different social norms, depending on whether pre-play information was favorable or unfavorable. In addition, we find unfavorable information to substantially reduce the effectiveness of peer punishment. For these differences to emerge it is immaterial whether each member or only one member of a four-person group receives the pre-play information.