Department of Economics

Social norms involve observation by others and external sanctions for violations,while moral norms involve introspection and internal sanctions. We develop a simple model ofindividual preferences that incorporates moral and social norms. We then examine dictatorchoices, where we create a shared understanding by providing advice from peers with nofinancial payoff at stake. We vary whether advice is given, as well as whether choices are madepublic. This design allows us to explicitly separate the effects of moral and social norms. Wefind that choices are in fact affected by a combination of observability and the sharedunderstanding.