June 1, 2001



An Equilibrium Approach to Culture

David D. Laitin and Barry R. Weingast

Stanford University

Version August 12, 2001

1. Introduction

This paper addresses four related questions: What is culture? How is it sustained? How does it change? What problems can be solved by the systematic study of culture?

Standard disciplinary approaches to culture have not given satisfactory answers to these questions. Cultural anthropologists (and their descendents who refer to themselves as poststructuralists and postmoderns) portray culture as all encompassing, continually reinforced through discourse, and thereby fundamental for understanding political power and economic relations. Although such portrayals are descriptively rich, they provide limited explanatory possibilities (Geertz 1973b, or for a more self-critical view Bonnell and Hunt 1999). If culture is pervasive, how can we assess the magnitude of its affects across institutions, societies, or time? Social anthropologists, in contrast to the culturalists, have emphasized a more limited domain for culture, but this at the expense of clear definitions of what it is and models for how it impacts on institutions (Gluckman 1955, Evans-Pritchard 1940, Barth 1969). Economists have long ignored culture and its impact on institutions, and thereby economics has avoided fundamental questions about the workings of institutions. Recent work in institutional economics has begun to remedy this gap, but problems remain. North (1991, etc.) makes no distinction between cultural phenomena and institutions, thereby falling into the same trap as the cultural anthropologists, seeing no limits to its effects. Several other economists provide promising but quite partial views of culture and its effects on institutions (Schelling 1963, Sugden 1989, Kreps 1990, Greif 1994, Chwe 2001). We propose here a theory of culture in order to capture the descriptive insights embedded in the anthropological tradition while at the same time building on the theoretical foundation provided by social anthropologists and more recently, economists. Our approach allows us, by specifying a distinct realm to culture, to assess the magnitude of a cultural effect on important social outcomes. It further allows us to account for cultural persistence as well as cultural change. Finally, it allows us address fundamental problems on the social science research agenda with new insights.

Our paper is organized as follows. In section 2, we provide basic definitions of the concepts that underlie our analysis. In section 3, we restrict the domain for which cultural analysis is applicable. In section 4, we raise two strategic issues that play crucial roles in sustaining cultural equilibria: coordination and sanctions. In section 5 we illustrate by example the workings of coordination and sanctions; in section 6 we illustrate how our approach addresses issues of equilibrium shift. Finally, in section 7, we discuss promising lines of enquiry that should be pursued along lines that our approach advances.

2. Definitions

What is culture? Culture is an equilibrium in which members of a cultural group, through shared symbols, ritual practice, and high levels of interaction, are able to condition their behavior on common knowledge beliefs about all members of the group. These beliefs include such things as the what are the boundaries of the group, what its members believe, and what they are likely to do under a range of circumstances.

This definition demands some unpacking.

What is a cultural group? A cultural group is a set of people who through descent or high levels of interaction share a set of symbolic practices, such as language, religion, artistic forms, and rituals, such as practices marking births, marriages and deaths. Through shared symbols and high levels of ritualized interaction, cultural groups develop cultural beliefs that meet the condition of common knowledge. In interactions with other members of their cultural group, cultural group members condition their behavior on this common knowledge.

What is common knowledge? The criterion of common knowledge is met when all members of a group have knowledge about a set of things, know as well that all members of the group have this knowledge, know as well that all members of the group know that all others have this knowledge, and so on. Common knowledge is attained through a variety of public activities. Chwe (2001) has shown the importance of circular formations in rituals as a way to promote common knowledge in small societies; and of TV ads on programs that everyone knows everyone else is watching to create common knowledge in larger societies.

What are cultural beliefs? Cultural beliefs (following Greif (1994)) are a set of common knowledge beliefs shared by members of a cultural group about what a member of the group would do under a range of conditions, including many circumstances that have not been observed. Therefore, cultural beliefs are exogenous to any individual but endogenous to the group in which he or she is a member.

What is a circumstance? A circumstance is a well-defined sequence of interaction; i.e. an extensive form stage game.

What are off-the-path beliefs (OTPB)? OTPB refers to nodes on a game tree that have not been (or rarely) observed because no members of the cultural group would have an incentive to choose a strategy that would lead to this node. Therefore, to choose action A, group member i must be able to predict what would happen were she to choose action B instead. With common knowledge of others’ OTPBs all members of the society know what will happen to them if they choose B.

What is a cultural equilibrium? Cultural group members i and j behave in a manner consistent with their beliefs because of incentives to do so in the particular circumstance. Member i’s actions in this circumstance constitute a subgame perfect equilibrium strategy. Put another way, the cultural beliefs about one another’s behavior are borne out in practice. This definition implies anonymity: All members of the cultural group behave in a similar manner in the given circumstance. That is, member i’s prediction about member j’s behavior in a given situation is identical to member j’s prediction about member i’s behavior in that situation, for all i and j in the culture group.

This equilibrium view further implies that behavior in cultural equilibria must be self-enforcing. Self-enforcing behaviors are observationally equivalent to what is commonly referred to as cultural norms. They look the same in operation. But they have different mechanisms that sustain them. In our framework, strategic action based on common knowledge over time takes on normative value, and the iterated path of play gets referred to as a cultural norm. We therefore use the term cultural norm to refer to patterns of action within an equilibrium that have been infused with value by members of the culture. How these patterns get infused with value is an empirical question.

Many cultural analysts in the Durkheimian tradition emphasize not the cognitive (based on beliefs) but on the emotive (based on feelings) nature of culture. People participate in cultures not because they believe in any of the claims made by leaders of cultural groups (its prophets), but because of the feelings of empowerment, or “collective effervescence” (Durkheim, Elementary Forms), that follow from participation. We do not deny that these feelings are evoked, and that cultural groups are empowered by those feelings. Rather, we see the emotive power of culture to follow from common knowledge, after an equilibrium has been infused with normative value. (e.g. of how to perform a ritual correctly) rather than precede it. Collective effervescence is therefore an observable implication of there being a cultural equilibrium rather than being a description of the equilibrium.

A cultural equilibrium, we also emphasize, is not merely a pattern of observed behavior within a particular culture. To understand an equilibrium, one needs to know the OTPB that drive it. Consider for example two different sets of institutions underlying arranged marriages. In the first, the woman cannot keep her property and has no veto power over the groom. In the second, the woman keeps her property and does have veto power. In both cases, the on-the-path behavior forms a pattern that appears similar. In both cases, the parents arrange a marriage, and the daughter accepts the choice. But the two have very different properties. Veto power in the second scheme implies that parents’ choice must respect the preferences and interests of their daughter. Because they anticipate their daughter’s choice, the daughter’s equilibrium behavior is the same — she accepts. But the consequences are different. Understanding the cultural equilibrium requires knowing the OTPB that enforce that equilibrium.

What is the set of things for which there must be common knowledge if there is to be a cultural equilibrium? The set of things that are a basis of common knowledge include: focal points in multi-equilibria games, so that members can coordinate; the equilibrium for a variety of circumstances, and hence they can predict the OTPB of others; that part of all other members of the group’s history whenever it’s necessary or at least how to find out at low cost who has defected in the past; and appropriate trigger strategies, concerning who should punish whom under what circumstances.

3. Where Is Culture to Be Found?

Our definition implies a domain restriction on culture: culture is not everything because in many settings the relevant group either lacks common knowledge or its members do not condition their behavior on the shared beliefs that constitute common knowledge. Our definition contrasts with two in the traditional literature on culture. The first is that culture encompasses only well-bounded groups, such as churches or isolated tribes. To be sure, Catholics and Yorubas are well-bounded groups that fit our definition of culture. Our view implies that culture is not limited to these well-bounded groups.

Well-bounded cultural groups play less of a role in modern society than they did in pre-industrial society. But this doesn’t mean that there is an absence of culture in modern society. We observe powerful cultural elements within modern institutions, such as in the United States Congress or Microsoft. Americans don’t qualify as a cultural group (little common knowledge). Yet within American society there is a plethora of cultural groups. For example, members of Congress share common knowledge about a range of circumstances that sustain equilibria. Krep’s work on corporate culture illustrates this point. Microsoft’s employees all know what Microsoft people are likely to do on a range of circumstances that have not been observed. Incomplete contracts between employers and employees are possible, Kreps’ work implies, because of common knowledge among Microsoft employees of what all Microsoft people would do under many (bus as yet, not experienced) circumstances. So culture inserts itself (i.e. cultural equilibria can be maintained) within complex modern institutions.

English-speakers constitute a cultural equilibrium though they also are not a well-founded group. Analyzing language as an equilibrium will undoubtedly raise eyebrows. People don’t choose to speak English; they just speak it as a form of everyday habit. And English speakers don’t choose to put adjectives before nouns; they do it without calculation at all. Indeed much of our cultural behavior (speaking, singing, greeting) is habitual and not the result of a conscious choice. However habit is a result of a stable equilibrium. When exogenous shocks occur, or when there is an endogenous shift of value on key parameters, people all-of-a-sudden find themselves calculating on how best to act given a new context. For example, during the Soviet era, few Russians in Estonia calculated the expected returns of speaking Estonian, as the high value of Russian monolingualism was unchallenged and assumed. But with the breakup of their political union, Russians were compelled to calculate the values of different language repertoires (Laitin 1998).

The second traditionalist view that we oppose is one which asserts that culture underlies everything. While it is true that symbols are pervasive, even ubiquitous in the social world, this does not mean that those symbols are consequential for a wide range of outcomes. If you seek to figure out the likely price of yams in Yorubaland, you would do best to examine such things as supply and demand, and not the quite unusual mechanisms (compared with buying a potato at your local Safeway) by which buyers and sellers attain that price. A powerful theory of culture must restrict the domain of human activity for which its effects are important.

Despite our domain restrictions on culture, the applications of our approach need not be narrow. In fact, we seek to expand the empirical range of cultural analysis. First, our approach allows us to address systematically a wide range of groups whose behavior sometimes appears to defy analysis from a cultural vantage point, such as such as deaf people, gays, or the Kula Ring. Second, our approach allows us to analyze behavior of individuals who have more than one culture. In our thinking, members of a cultural group can be members of other groups, including other cultural groups. Thus, a member of Congress can also be a devout member of the Catholic Church. Third, our view of culture does not restrict analysis to groups that share a well-defined cultural repertoire, involving religion and language. Armenians in Los Angeles who do not speak Armenian and who have never practiced Armenian religion can still meet a common knowledge requirement and so condition their behavior to meet the criteria of a cultural group. Our view of culture, to make a fourth point, is not restricted temporally. Gellner, for example, insisted that culture was irrelevant in European feudal society because no peasant cared what language his ruler spoke. Peasants conditioned their behavior on the size of the tax bite rather than the dialect of the tax collector. For preliterate societies, according to Gellner, “No-one, or almost no-one, has an interest in promoting cultural homogeneity… (1983, 10). In our view, the gains for cooperation are ubiquitous. Groups fulfilling common knowledge criteria can reap those gains. Therefore there should be domains of cultural production at all times in history. The fact that there were no powerful national cultures does not rule out other cultural forms in preliterate societies. Feudal society constituted several cultural groups. The medieval manor was organized around a local community that was largely self-sufficient. For most peasants, this was their entire world, which also constituted a cultural group. Lords of the manor were also part of an elite society, with a traditional set of duties and obligations toward one another. This too constituted a cultural group. Finally, most feudal societies also had small towns, which tended to be larger and more complex societies than the individual manor. In this view, feudal Europe was thus composed of a set of overlapping cultural groups.

4. Core Problems in the Study of Culture

Our approach to culture as equilibrium pays special attention to two strategic problems that pervade culture: coordination and sanctions. Coordination games constitute a large set of circumstances in which culture plays a significant role (Chwe 2001). Many observers of culture have noted the importance of consensus for culture (Almond and Verba 1963), and therefore defined culture in terms of the common values that underlie that consensus. But in our view, consensus does not emerge as the result of agreement on values; rather it emerges because of equilibrium incentives, particularly in coordination games. In these games each actor gains only to the extent that strategies for all players are the same. Coordination games therefore provide the paradigmatic example of a setting that affords the necessary type of consensus to produce “culture.” Everyone has an incentive to coordinate. Even when the coordination game has rents to distribute, unless the latter are extreme, most people have an incentive to go along so as to achieve coordination even if the group is not coordinating in their most preferred way. What may appear as consensus on values driving coordination is, in our theory, common knowledge producing coordination. This coordination brings rewards for all actors. As a result of the rewards that come from coordination, actors begin giving high value to a particular coordination point. This value is usually taken-for-granted until it is challenged; but under challenge, those gaining the most from that coordination point have an incentive to infuse normative value into what had been a convenient coordination (Bourdieu 1977).

The role of sanctions is crucial, given the role of OTPB in our definition of culture, to maintain equilibria in the long term. In many circumstances in which members of a cultural group interact (mostly in conflict games, but it is also possible in coordination games) there will be an incentive for at least some actors to defect from the cultural norm. In order for cultural equilibria to persist, members of cultural groups need to develop methods of sanctioning potential defectors through trigger strategies. Sanctions then become part of the common knowledge within a cultural group telling members the costs they will likely pay if they choose to defect from any equilibrium.

Sanctions as integral to culture have not been well studied. Cultural anthropologists who assume that people are imbibed with the norms (perhaps through the superego) see no need for sanctions to maintain normative behavior. Social anthropologists see sanctions as exogenous to culture rather than one of its constituting elements. Game theorists have not been easily able to incorporate a theory of cultural sanctions because they see sanctions as too costly, subject to free rider shirking, and therefore not supportable in many equilibria. We argue, however, that without credible sanctions, cultural cooperation could not be sustained. A theory of culture must therefore provide an incentive for individuals to sanction norm-breakers.

Notions of coordination and sanctions are ubiquitous in discussions of culture, but rarely within the same theory. Cultural anthropologists miss the mechanics of coordination through taking value consensus too seriously; yet they are careful recorders of sanctions. Meanwhile, economists who have made great progress in understanding the mechanics of coordination haven’t gotten the sanctions right, although many anthropologists, especially the Manchester school, do. In our equilibrium approach, coordination and sanctions are both core mechanisms.

5. Applications I: Culture in equilibrium

The purpose of this section is to demonstrate that the equilibrium approach to culture captures the mechanisms underlying cultural behavior. Furthermore, this approach’s attention to problems of coordination and sanctions helps solve core problems in political analysis of cultural groups. To show the importance of common knowledge, we first apply our approach to interpret a classic work on culture, Clifford Geertz’s (1973a) “Deep Play: Notes on the Balinese Cockfight”. To show the importance of sanctioning, we next apply our approach to ranchers in Shasta County, California and to newcomers in the United States House of Representatives.

In a classic essay, Geertz interprets the Balinese cockfight. In his portrayal of the Balinese as a cultural group, Geertz shows that there was common knowledge among them that, given their alleged propensities known to all, if a small incident of communal violence erupted, it could quickly spiral into uncontrollable chaos. Two norms evolved in tandem that lowered the chances of such an incident: a public demeanor of studied calmness that would keep emotions out of nearly all interpersonal dealings; and the cockfight, that metaphorically dramatized (i.e. turned into common knowledge) to all attendees the cultural belief about Balinese psychology and its propensities. The cockfight symbolically reinforced the common knowledge of the potential costs of violence if it were not their cocks who were doing the fighting, but themselves. The Balinese so feared their (presumed) capacity to act with the ferocity of their "cocks" (as an analogy, Geertz compares this to the way many Anglo-Saxons fear they are capable of acting with the unconstrained ambition of Macbeth), that they organize themselves socially so that emotional displays are considered inappropriate in everyday life. The common knowledge about their propensities conditioned their behavior in such a way that they would be vigilant in all interpersonal interactions to remain on the equilibrium path of peace. Norms of self-effacement and boisterous community participation in cockfights helped sustain this cultural equilibrium. The equilibrium supported long periods of absolute peace punctuated by mass violence if -- through accident or outside agitation -- the Balinese were derailed from their equilibrium path.

Geertz warns his reader against using his cultural interpretation for any sort of predictive purposes. However, he does suggest that his analysis of the symbols used in cockfighting gives us an understanding of the massacres that took place in Bali in 1965, making it seem "less like a contradiction to the laws of nature" that an extraordinarily reserved and peaceful society could be capable of a sudden outburst of unimaginable ferocity.

From this example, we can see how common knowledge (of the propensities of Balinese) and cultural practices (the cockfight) support an equilibrium (low levels of interpersonal engagement in everyday interactions). Actions on the equilibrium path (self-effacement) were infused with normative value. There is no need to postulate Balinese preferences for self-effacement or values supporting cockfighting, in defiance of Indonesian law. To be sure, Geertz did not present this material as an example of culture as an equilibrium, but the ethnographic material coheres more fully when presented as an equilibrium. Missing in Geertz’s cultural analysis (and far more generally in his work than in this essay) is a concern for cultural sanctioning. To see how sanctioning complements coordination, we will consider two other ethnographies.

Ellickson (1991) considers how cattlemen in Shasta County, California maintain their norms that are often at odds with formal law. Questions such as who is responsible for repairing fences and where cattle are free to graze have for Shasta County ranchers complex answers consecrated in norms. These norms are commonly known to long-standing residents of Shasta County. When community members (or newcomers) break those norms, for example through insufficient control over where their cattle graze, community members have available to them a hierarchy of sanctions. At first they would gossip at a centrally located breakfast nook and say bad things about the defector. If this doesn’t work, his cattle might get driven to grazing areas that made them very hard to retrieve. Moving up the hierarchy, continued breaking of the norm might lead to the defector’s cattle being castrated (but rarely killed, as this would imply that the person administering the sanction is personally profiting from the sanction, which would break another norm). An ultimate sanction is to let it be known through gossip networks that if, by chance, his property were to catch on fire, they couldn’t be sure whether the volunteer fire unit would make it in time. Social norms were thereby upheld through a carefully graded system of sanctions. Applying sanctions in this case seemed so effortless that Ellickson does not even inquire why Shasta cattlemen would administer them.

Consider now the problem of newcomers elected to the Congress. Every two years, a group of newcomers arrives in the Congress. Existing members of Congress have no control over membership in their society. Existing norms favor senior members. The big problem is that the newcomers do not share the common knowledge that sustains the cultural equilibrium of House members. Hence they must be “socialized,” to use the behavioralist’s term. Several problems occur that imply conforming is not automatic. First, the old timers explain the norms to the newcomers, that is, “how things work around here.” Many newcomers will believe this, but some will be skeptical and test it. Second, in other cases, newcomers will be ignorant of the fine details of the norms and will just act with incomplete knowledge. This implies that they will make “mistakes”, triggering responses, and then learn about the OTPB that sustain House norms.

The absorption of newcomers implies that common knowledge has to be produced in order to support a cultural equilibrium. Because conformity to established norms is not automatic among newcomers, it is to the great advantage of senior members to apply sanctions when newcomers diverge from the equilibrium path. But this is a subtle problem. So called “grim trigger punishment mechanisms” (in which harsh punishments are handed out for first time offenders) are to be avoided, as they are likely to plunge the entire Congress into a cycle of non-cooperation. Thus old timers develop a hierarchy of punishments, not unlike what Ellickson reported for Shasta County. This helps communicate the equilibrium to the newcomers in a relatively unthreatening way. Consider a newcomer making a “mistake” or testing the system. When a bunch of old timers respond in an unpredicted way, if only mildly costly, it signals that more serious sanctions will follow if the behavior is continued.

Consider an application of these principles from Fenno (1966). Newcomers to Congress -- not yet fully grasping the full extent of the congressional norms giving preferences to those members with seniority, those who have safe seats, and those who have friends in high places -- lobby to get plum committee assignments. One of the sweetest plums is the Appropriations Committee. Rarely do freshmen congressmen get onto this committee, allowing for what Fenno describes as “lengthy and painstaking scrutiny” of potential members to be sure they understand House norms. In the period of John Taber’s chairmanship, Fenno reports, a sure way to lose the competition was to express or be associated with “wild ideas.” Those with such ideas get sanctioned.

Applying such sanctions is costly, yet with no discernible impact on the reelection possibilities of those applying them. In fact, one might think that the opportunity costs of applying sanctions for building one’s electoral base at home are non trivial. Nonetheless, according to a member of the Committee on Committees, Taber attended all its meetings making sure that unworthy members would not be assigned to Appropriations. Taber also conducted “security checks” on potential members, examining their behavior in Congress and their reputations in their own districts. To be sure, Taber did not face harsh challenges in his reelection bids, so the opportunity costs for him of performing security checks were low. But what comes out clearly from Fenno’s treatment of this process is that Taber’s status in the House, because of his use of appropriate sanctions, was immense. Referred to by colleagues as “our top guy”, he was a legend, even able to exert more influence over membership of his committee than the Speaker. One clear motivation to apply sanctions is that if artfully done, the in-group status of the member who applied the sanction increases (all quotes from Fenno 1966, chap. 2).

6. Applications II: Culture change

One of the principal liabilities of traditional approaches to culture is that they had no theory of culture change. These approaches provided stunning portraits of on-going, stable cultures, based on a belief that culture was in some way naturally self-sustaining.

Our equilibrium-based approach has the potential to provide a more dynamic understanding of culture. Equilibrium models often yield comparative statics results showing how the equilibrium changes as various exogenous parameters change. Newer equilibrium models are designed to show how over time static equilibria can have the endogenous affect of changing parameter values, thereby decreasing the range of situations in which the equilibrium will hold (Greif, in press). We propose to employ concepts from these models to show how culture breaks down in certain settings, and how it evolves in others. Moreover, we plan to use various models of “constructed focal points” to show how culture is often created at specific moments, where particularly important coordination problems are solved through the creation of a new focal point solution where previously there was none (i.e., no obvious Schelling point).

To illustrate the analysis of cultural change, we first summarize the findings of Mackie (19xx) on Chinese footbinding. We then look at an especially difficult problem in anthropological work, that is the analysis of the breakdown of order in the segmentary lineage systems in Sudan and Somalia. We also comment on several rapid changes in western society such as the civil war in 17th century England, revolutionary America, and America on the brink of its civil war.

Footbinding in China was for a thousand years a cultural norm. In this extremely painful practice, the four smaller toes of a young girl’s feet were bent under, and then wrapped in a tight bandage to mold an artistically pleasing -- but dysfunctional for walking -- four-inch long appendage. The origins of this norm in the 10th century have to do with competition for marriage partners, and incentives for parents to prove that their daughters are pure and modest, in part to assure potential husbands that their paternity of her children would not be in doubt. By the 14th century, the practice was almost universal, an essential element in Chinese culture. In our terms, there was by then common knowledge throughout Chinese society that only slaves, prostitutes and outcastes did not bind their daughters’ feet, and that any well-born girl would be shunned on the marriage market if her feet were not bound. The norm perpetuated not because well-born parents valued it, but because these cultural beliefs were common knowledge and parents well understood the consequences of off-the-path actions.

By the 17th century, the practice faced many strong opponents. The Manchu dynasts (like the independence regime in Indonesia in regard to cockfighting) were appalled by footbinding and legislated against its practice with draconian penalties. Other high-profile opponents of this practice, including foreign missionaries and local literati, also failed. The practice seemed to be essential to Chinese culture, and therefore not subject to manipulation.

But oddly, the practice disappeared within a single generation in the early 20th century, through the creation of local assurance societies, whose leaders recruited members by arguing that the practice was harmful and not practiced anywhere else in the world. Those who joined these societies then pledged neither to bind their daughters’ feet nor to let their sons marry women with bound feet. When members were assured that their daughters would have marriage partners, they ceased binding their feet. And when a sufficient number of unbound girls were successful on the marriage market, common knowledge in the whole of China in regard to marriage availability broke down as well. The practice quickly disappeared.

Our equilibrium approach similarly allows us to analyze change in a set of norms have long sustained segmentary-lineage opposition systems in east Africa. In the classic treatment of cattle theft and other crimes among the Nuer, Evans-Pritchard (1940) [and Bates 19xx, in his reanalysis of E-P’s work in 1983] put a lot of weight on expectations about retaliation in explaining how the Nuer get a degree of order (low levels of cattle theft and violent crimes) despite the fact that they belong to an acephalous society. This low level should not be exaggerated. As pointed out by Colson (1974, 43), "There is `peace in the feud' as Gluckman has said (1955:1-26), but it is a peace based on the prevention of the first act rather than the force which leads to the final settlement." Colson therefore reminds us that Nuer feuds, even with deterrence, were painful and costly. E-P was well aware of this, and pointed out that the Nuer had engaged in considerable violence that was largely contained by the British imperial state (E-P 1940, 151). Nonetheless, E-P’s overall explanation for a moderate and well-regulated degree of order within an acephalous society is a standard deterrence model. As with similar theories in international relations, it requires no reference to cultural beliefs or common knowledge.

Yet in E-P’s ethnography, he points to a set of beliefs that have the characteristics of being common knowledge that is shared within Nuer society but not outside of it. Below is a list of such beliefs:

(1) that all Nuer understand the logic of segmentary-lineage opposition, and therefore know, if there is a violent feud, on whose side it is appropriate to join;

(2) that if your clan is in a fight, and you are an adult male, you are obligated to fight (pp. 151-2);

(3) that there is no blood to be spilled in a chief’s compound (p. 153), and it is appropriate for a murderer to lodge safely in this compound until tensions reduce (p. 153);

(4) that the clan of the slain person should reject the first offer for compensation offered by the chief (p. 153);

(5) that there should be dead weight losses for the society should there be a homicide, due to the offering of a sacrifice (p. 154);

(6) that a feud, once begun, and outside of the inner clan, never ends (p. 156);

(7) that certain people (e.g. women, children) are never killed in a revenge (158); and

(8) that in the case of inter-Nuer homicide, combatants were regulated by views of pollution (nueer), which precluded recourse to the most destructive weapons and tactics in interpersonal confrontations among kinsmen (as summarized by Hutchinson, p. 155).

Why study these beliefs if deterrence can explain the outcome? Examining the common knowledge beliefs that underlie the retaliation equilibrium facilitates the coming to grips with the system’s breakdown. Consider first the case of the Somalis, whose segmentary lineage structure as described by Lewis (19xx) is similar to that of the Nuer. Somali culture was described, consistent with the lineage structure, to be acephalous, subject to violent fights over scarce resources (in the Somali case, watering holes and grazing lands), and rapid returns to reconciliation as lineages responded to fighting among related clans through alliances that eventually restored a balance of power. Analysts of Somali society reared in the E-P tradition were thunderstruck by the civil war that escalated without constraint after the overthrow of the President, Maxamed Siyaad Barre, in 1991. Lineage did not balance against lineage in a symmetrical manner; rather a set of autonomous warlords engaged in a war against all, in the attempt either to secede from the state or to capture state power. Pre-1991, clan balance and short duration of feuds were explained by segmentary lineage theory. This made sense. Post-1991, unending warfare was accounted for by the same analysts according to segmentary lineage theory. This did not make sense.

The explanation for the escalating violence post 1991 in Somali has little to do with Somali culture. It has much more to do (elaborated in Laitin 1999) with the changed resource extraction possibilities of coup winners and potential challengers in Africa since the mid 1980s, when the superpowers ceased giving large military and police reward packages to coup leaders, enabling them to buy off potential opponents. After 1985, potential opponents were able to procure weapons and other materiel through diasporic networks as efficiently as could self-declared presidents through standard aid networks. Because of the uncertainty of who could hold out longer (president or rebel), wars of attrition rather than consolidation of new leaders followed several African coups.

In the Somali war of attrition, two of the three large clan-families (the Hawiye and the Isxaaq) were seeking to capture the presidential palace in Mogadishu that was abandoned by a subset of the third clan-family (the Daarood). A Hawiye was the first to capture the palace, but before the dust could settle, he was attacked by a rival Hawiye clan leader from another subclan, Maxamad Faarax Idiid. This move by Idiid made sense in terms of the war of attrition, but went against a clear rule of alliance-making in the segmentary lineage system, where Hawiyes should unite against a common Isxaaq or Daarood threat. This dramatic signal of the breakdown of a fundamental alliance norm dramatically undermined other lineage leaders in their attempts to recalibrate clan alliances to build peace.

Rather than postulating two antithetical equilibria supported by the same lineage system, our approach would point to the exogenous factor that undermined the cultural beliefs that helped sustain the segmentary equilibrium. Thus you can have the same observable set of clans within an acephalous society without the underlying beliefs that sustained a particular cultural equilibrium. Structure alone did not produce the peace; the cultural beliefs about the segmentary lineage system were part of the peaceful equilibrium.

Let us return now to the Nuer, who have been engaged in two bouts of intense civil war within Sudan (1963-1974; 1983--). The master narrative of these civil wars is that of an Arabized and Islamicized north facing a secessionist threat from an African south, which has been penetrated by Christian missionaries. But within this war, there have been significant numbers of people killed in inter-tribal wars in the south, and intra-Nuer wars also within the south. In the civil wars, local patterns of inter-community feuding were exacerbated and manipulated by both sides. Nuer prophets were under the employ of both sides as well. Worse, among the Nuer, the interwar years brought a rapid escalation in intra-Nuer brutality. “Gun toters” terrorized the villages to expand their herds and to settle personal vendettas. The question any follower of E-P should ask is how could there be intra-Nuer warfare in the face of an outside threat, given what we know about segmentary lineage structure?

Hutchinson (1996) in her recent ethnography of the Nuer provides two clues that are consistent with our approach. First, going back at least as far as 1956 (when independence was granted), there developed a new identity group -- blacks -- that was superimposed on tribal identities. From the point of view of this black identity group, “Arabs” (who were associated with “northern” Sudanese) began dominating them due to guns provided by the British. A black identity was opposed to Arabs who got “the gifts of the gun and overrule from the British.” Collectively the Nuer combined with other non-northerners, and referred to themselves as “black peoples”. Here is the first hint: cultural beliefs entail common knowledge about who are the members of one’s cultural group. From the late 1950s for at least some Nuer, the answer to this question became ambiguous, and they could condition their behavior either as blacks or as Nuer (pp. 103-105).

A second hint comes from her discussion of the role of guns in (the Eastern Jikany branch of) Nuer society. As soon as they became available, guns were used for warfare, but they also became integral to other cultural practices. They became a prized element of bridewealth payments, often trumping the traditionally more valuable gift of cattle. Rifles also were used as motifs for artistic, poetic, and metaphoric representations, and became part of ritualized courtship displays. Ownership of them was traditionalized as well, as they belonged to families rather than individuals. Yet, Hutchinson sees behind this symbolic incorporation of guns into Nuer cultural practices and suggests that it reflects a decline in Nuer male’s ability to fulfill their primary social role of defending the homestead and the herd. With the proliferation of guns came a breakdown in nueer, the pollution restrictions controlling homicide. The nueer restrictions on commensality between families of slayer and slain were increasingly ignored. The sheer rapidity and force of gunfire made the cultural belief that homicide altered the slayer’s blood flows inducing pollution seem irrelevant (Hutchinson, pp. 149-57). In our perspective, we see that cultural beliefs about the effects of killing on the killer were beginning to fray with the massive introduction of guns, and therefore the restraints on crime that were supported in part by the common knowledge that all Nuer held those beliefs were also undermined. Again, segmentary lineage structures remained, but killing increased, in part because the beliefs that supported the deterrence equilibrium ceased to be commonly held.

Social anthropologists in the E-P tradition have long relied on incentives rather than internalized norms to account for the persistence of norms. Yet they have not been able to account well for the breakdown of norms in a coherent manner. We believe that our exploration into the beliefs underlying segmentary lineage cooperation provides added explanatory power.

Our equilibrium approach to culture enables us to solve puzzles in explanations of the civil war in 17th century England and the American revolution and civil war as well. [FOR BW TO WRITE]

Standard approaches to culture that rely on internalized norms have no theory of cultural change. Our approach, based on the notion of equilibrium, can explain both the persistence of norms (they are part of the equilibrium) and their rapid shift (in this case, concerted action to undermine beliefs that the practice was desirable and the common knowledge that all parents would continue the practice).

7. Problems to be Solved

In this concluding section, we highlight several big problems that our approach is designed to solve, though we leave for future work fuller expositions on their solutions.

The Slow Evolution of Culture

The first problem to address is the apparently slow evolution of culture. Our perspective suggests that if culture is an equilibrium mostly in coordination and coordination-like games, then changing culture requires that equilibrium behavior change. In the context of coordination games, this requires the construction of a new focal solution. As we know, such changes in equilibrium are hard to engineer (as Mackie shows in regard to footbinding), even when nearly everyone agrees they'd be better off, if only the group were coordinated in a different way.

This leads to the more general problem of the incentives for people to continue investing in their culture. While Hardin (1995) is somewhat dismissive of them in his analysis of the “epistemological comforts of home,” these incentives have broader pull. Being a member of a cultural group helps limit the number of situations in which we risk being humiliated by making a choice others clearly think is inappropriate but which we, not living with them, cannot know. The lack of common knowledge of preferences sets us up for these types of minor embarrassments and humiliations everyday. Part of what culture does is to give us a series of focal point topics and activities that are widely accepted, thus setting limits to the degree to which we can embarrass ourselves in public. Knowing that a few minutes with the sports pages in the local newspaper can get you through an interaction with a large set of Americans of different social classes is a good example.

In Butterfly Economics (Ormerod 1999) a book that purports to make fun of economics’ focus on the individual, most of the author’s examples are cases of coordination games. For example, he suggests there is much herding behavior for Christmas gifts that cannot be explained using individual rationality. Not so, we say. Suppose that in 1998, an adult needed to buy a gift for another family’s kid. She has the choice between the enormously popular pokemon (the supposed herd behavior) or a random gift. The pokemon is a safe and easy choice. It requires minimal effort and time to choose. It will not embarrass the giver. Meanwhile, a random gift runs the risk of being irrelevant to the kid’s world, hence a potential minor humiliation. Herding behavior has long been modeled for its negative role in the non-aggregation of dispersed information; but in our view, it can represent a payoff from common knowledge that allows the herder to avoid humiliation.

This approach to culture, and its apparently slow evolution, helps address the problem of relatively low cross-national labor mobility. An important local public good provided by states in a federal system and by countries in the international system is a homogenous culture. Many parents want to educate their kids so that the kids share the common knowledge embedded in the local culture. The state often provides this good through the public school system (teaching history, customs, and language).

The demand for this public good, especially by potentially mobile middle class individuals with capital and skills, has important effects for the world that are missed by international trade theorists and by theorists of federalism. For example, within the international system, many talented Dutch, Israeli, or Swedish professionals remain in Holland, Israel, or Sweden so that their kids will be educated there, and will thereby achieve mastery of the language and the culture. They pay a price to receive this public good – they forgo considerable economic rents on the international market. Similarly, many regions provide the same type of local public good within their country. Flanders, Québec and Catalonia are examples. This has interesting economic consequences.

First, there is considerably less labor mobility than predicted by neoclassical trade theory, as many talented and skilled people do not take the best or most lucrative economic opportunities available to them, but instead remain in their country of origin for their family and kids. These people knowingly pay an economic price to consume this good for their family. Presumably they value the good more highly than they do the foregone income.

Second, because talent is less mobile, not moving to the highest valued economic use, there is less specialization and exchange in the world than the neoclassical model predicts. There is also greater economic homogeneity and more middle class people in, say, Europe than otherwise. Similarly, capital is probably also less concentrated: some firms will invest in, say, Sweden, to take advantage of the high quality labor pool, which it would not were the labor pool to move elsewhere in the international system.

Third, the efficiency consequences are mixed. On the one hand, the efficiency implications might be negative, in part because the lower level of labor mobility and lower concentration of capital implies economic losses. On the other hand, this is all voluntary. The reason this phenomenon occurs is not because of explicit barriers to mobility — which would create efficiency losses. Instead, it occurs because individuals voluntarily forgo higher incomes in order to consume local public goods (to consume themselves and invest in Swedishness for their children).

Fourth, the effects of these distortions are a function of country size (Lazear 19xx). Swedes are highly unlikely to find enough other Swedes in another country to have sufficient economies of scale to provide local schools for their kids. Large immigrant communities are different, however, such as the Mexican communities in the United States. This suggests that the distortion effect will be stronger for small countries.

In sum, rates of cultural change are slow; but an equilibrium approach to culture can account for these rates, allowing for new insights in regard to labor mobility and attachment to culture that is missed by those who tautologically claim that culture persists because it is deeply engrained.

Cultural Difference

A second problem is to explain how and why different cultures solve similar problems differently (different equilibrium behavior) or have similar behavior but have a very different OTPB and normative structures supporting that equilibrium. Greif (1994) has made great progress in showing how different cultural beliefs support different equilibria in addressing long distance trade agency problems. In equilibrium, agents in both the Maghribi and the Genovese trading systems acted honestly, but the cultural beliefs supporting the equilibria were different. Thus principals acted differently in the two societies in the face of similar exogenous shifts in incentives. This work demonstrates the power of comparative cultural analysis, a field that was virtually abandoned when each society began to merit its own ethnography. Extending this approach will allow us better to appreciate the critique leveled by Joseph Stiglitz against Jeffrey Sachs in regard to recommendations for Russian economic reform. According to Stiglitz, Sachs and his associates never endogenized into their reform models Russian expectations about how other Russians would act in the face of market reforms. Russians shared common knowledge about these reactions; outsiders were blind to them at a very high cost. Our approach gives a framework for revitalizing this field.

Inter- vs. Intra-Cultural Conflict

A third problem concerns differentiating intra from inter-cultural conflict. Fearon and Laitin (1996) attribute the difference to the issue of information. Intra-culturally actors know (or can easily find out about) the complete history of play of any actor with whom he or she is in contact. This information allows for efficient use of punishment strategies for past defections. But inter-culturally, this information is costly, and often not available. Costlier mechanisms to sustain cooperation, which has mutual benefits, must be devised in order to support the gains from inter-cultural exchange. The perspective developed here points not so much to history of play in a simple game, but rather the OTPB sustaining equilibria in more complex games. What may occur in inter-cultural exchange is that actors enjoy long periods of cooperation, albeit sustained by different off-the-path-beliefs. Only when there is a shock do the players recognize that there is something wrong, or untrustworthy, about the other player, and cooperation breaks down.

Consider pre Civil War America. Northerners had only once observed Southerners near the brink of secession, and then the compromise of 1850 kept Southerners in the fold. Many historians argue that Northerners in 1860 failed to recognize how serious Southerners were about secession in the late 1850s. Northerners thus acted with greater insouciance than the situation warranted. In particular, they were surprised both by southern secession following the election of Lincoln and that the Southerners were so serious about secession. The fact that secession was OTP for most of the antebellum years implied Northerners had little opportunity to learn about it. Perhaps what is critical is that here. Northerners and Southerners had a different culture and they mis-predicted one another’s behavior.

Inter-cultural mistakes are common where outsiders observe patterns but don’t know the OTPB that underlie those patterns. Few Americans are ignorant of the rules for using the word “nigger”. A foreigner hearing the term used freely in racially homogeneous settings might make the mistake of using it in an interracial setting, and be shocked by the resulting anger, never having observed the term used off the path.

The incendiary quality of inter-cultural relationships is a theoretical conjecture without systematic empirical support. Here we provide examples. But there is no evidence that inter-cultural transgressions have especially incendiary qualities (Fearon and Laitin 2001). Furthermore, it may turn out to be the case that parties to exchange inter-culturally, knowing the probability of misunderstanding is high, will play more forgiving strategies than will players interacting intraculturally. It would therefore be a useful extension of our approach to systematically compare the breakdowns of cooperation within cultures and across them.

The Problem of Sanctions

A fourth problem addresses the thorny issue of sanctions. Culturalists have rarely problematized the issue, assuming that sanctioning is costless. Meanwhile, game theorists have not been able as yet to account for the willingness of group members to impose sanctions that impose costs on the one applying the sanctions. This issue is posed as one of second order defection, where an actor cooperates with cultural norms but won’t pay the cost of sanctioning those who do not. Game theorists have identified such factors as group size and the marginal increase in the production of a public good for each additional cooperator to account for varying levels of second order defections. In one model, if some actors have highly effective control over others, cooperation can be sustained through “hypocritical cooperation,” that is where some actors do not themselves participate in cooperative activity but sanction others for not participating (Heckathorn 1989). In all these models, sanctioning is usually opposed to free-riding, with the former having a positive cost and the latter having no cost. Our approach, by problematizing that dichotomy, and by examining cooperation within cultural groups, suggests several new lines of attack on this problem, as suggested by the Shasta County and Congress examples.

First, cultural groups reduce the costs of learning who has defected. That information comes freely as an externality of the gossip networks that serve as the source of common knowledge. Therefore, those imposing sanctions (pace the activities of Congressman Taber) need not expend too much energy to detect those who are defecting from norms. Second, the costs of imposing a sanction, given the hierarchy of punishments that we have reported, are initially quite low. Gossip and reputation-bashing at the low end of the sanctioning hierarchy allow a few people to respond to a defection in a way that is very visible for the rest of the community, and powerful in terms of effect. A mild but easily visible punishment signals to everyone to watch the accused defector. In this view, the hierarchy of punishment is partly a mechanism for reducing initial costs of sanctioning. An illustration of the early stage of punishment is the “hue and a cry” in medieval English markets: in order to publicize a defection, a merchant would raise a “hue and a cry,” so that everyone else stopped what they were doing and came to investigate. This “hue and a cry” is relatively costless to impose but rather costly to have imposed on you.

Third, as suggested in the discussion of John Taber, imposition of a well-calibrated and appropriate level of punishment actually provides status to individuals and thus gives rewards to cover at least some of the costs of punishment. Consider an athlete, say a tennis pro, who makes an especially unique and unpredicted response to a given situation. All insiders admire this, and these instances are much discussed. Similarly for punishments. Sometimes (even mild) punishments are cleverly designed, both to uncover defection but also to costlessly communicate the act of defection and identity of the defector. Put another way, the other side of humiliation (where attention is usually given to the victim) may well be that the humiliator is given accolades for careful, skillful, and clever sanctions. On the trade-off between the goal of attaining in-group status and other goals (such as income or reelection for members of Congress), we earlier suggested that these goals are in conflict. But often there is a correlation, but not always perfect. Thus, members of Congress who are great at parliamentary maneuvers typically gain not only in-group status but also influence. That influence may have important electoral advantages. Hence the two go hand in hand. But this remains a problem to be solved. To the extent that status is a separate goal from other forms of utility, we need to worry about how to model it, i.e., to integrate a model where the players have preferences over both status and other outcomes. Sociologists have analyzed the worth of deference that comes from high in-group status (Blau 1963; Coleman 1990, pp. 129-31). This approach seems to hold promise to further analyze sanctions in an equilibrium theory of culture.

The Rise of the West

A final problem to be solved is the greatest challenge to 19th century European sociology and contemporary economic history: how to account for the “rise of the West”? The premodern social equilibrium represents small communities that rely on what North and his collaborators call cultural enforcement — face-to-face, in-group, or community enforcement mechanisms. The premodern world not only relies on face-to-face mechanisms, but on the very localized common knowledge mechanisms that aid repeat play enforcement among a small community. However effective these mechanisms are, there are endogenous limits on the size of these groups. Limits on the size of groups, in turn, imply limits on the gains from specialization and exchange and hence on economic development. Although there are potentially large gains from larger groups – greater specialization and exchange – traditional societies have not been able to sustain cooperation among large groups.

According to North, the big step in the development of the West is the rise of impersonal exchange; that is, exchange between buyers and sellers who have never met before and may never meet again, as occurs in long-distance trade. Large economies, capturing the gains from specialization and exchange, require establishing impersonal exchange. Impersonal exchange, however, requires more complex mechanisms of enforcement than face-to-face enforcement mechanisms. These mechanisms allow us today to transact with someone we’ve never met and never expect to see again.

Subsequent work has elaborated on the institutional innovations that supported long-distance trade. First is the invention of the Law Merchant (Greif, Milgrom and Weingast). Then came the guild (Greif, Milgrom and Weingast), and finally, we get the economic integration of the state. No longer is this merely long-distance trade among towns, but unencumbered trade within the nation. All these innovations required the adoption of legal mechanisms to enforce merchant exchange. All of these modern institutions also involve types of third party enforcement (meaning that others in the community are necessary to police disputes between pairs of traders).

The new institutional economics clearly dominated the reigning cultural theory of the “rise of the West”, associated with the rise of the capitalist spirit (Weber 19xx). Weber hypothesized that an innovative doctrine of salvation as articulated by Calvin gave solace to and even as incentive for those individuals who wished to work long hours, to suffer the complexities of double-entry bookkeeping, and to abjure from spending profits on consumer items. The problem with this explanation is that people who wanted to engage in modern capitalist endeavors had an incentive to buy into Calvinism. Modern capitalism gave honor and adherents to the new prophets of the Reformation (Laitin 1977). Protestant doctrine therefore gave justification for a new economic equilibrium already in formation. Weber’s lines of causation should be reversed.

The failure of the Weberian theory to stand up to the historical evidence does not imply that culture has no role in the explanation for the “rise of the West”. Our cultural equilibrium approach to this problem points to a new avenue for investigation, namely culture’s route from defining a premodern society to embedding itself within modern institutions. In early modern societies, we have seen the explicit limitations on cultural enforcement mechanisms and the need, under certain circumstances, to replace or supplement cultural mechanisms with more explicit formal institutions. In the case of the “rise of the West”, impersonal institutions helped allow exchange among a larger set than a cultural group could support. In an incremental series of innovations of formal institutions, creating an increasing dense network of rights, western institutions helped underpin a variety of innovative trading mechanisms. But this change is not, we hypothesize, a linear movement from “status” to “contract” (Maine 19xx). Rather it is a move of culture from being societal in scope to one that can be discerned within large-scale institutions. The “rise of the West” involved not the replacement of culture by third-party enforcement but rather the transfer of cultural equilibria from the societal level to the institutional level. Economic dynamism could not be sustained, we conjecture, without common knowledge-based cultural groups within economic institutions. This conjecture gets support theoretically from Kreps 1990, but the mechanisms creating cultural equilibria in the interstices of modern institutions remain obscure. Therefore our approach recommends the study of the re-placement of culture rather than the elimination of culture as a theme accounting for the “rise of the West”.

The equilibrium approach to culture not only helps reinterpret coherently a range of works in cultural and social anthropology, but it suggests new lines of ethnographic and game theoretic research. This is an approach to culture, therefore, that merits systematic attention.

References

Almond, Gabriel and Sidney Verba (1963) The Civil Culture (Princeton: Princeton University Press)

Blau, Peter (1963) The Dynamics of Bureaucracy (Chicago: University of Chicago Press)

Bonnell, Victoria and Lynn Hunt (1999) “Introduction” in Victoria Bonnell and Lynn Hunt eds. Beyond the Cultural Turn (Berkeley: University of California Press)

Bourdieu, Pierre (1977) Outline of a Theory of Practice (Cambridge)

Chwe, Michael Suk-Young (2001) Rational Ritual (Princeton: Princeton University Press)

Coleman, James (1990) Foundations of Social Theory (Cambridge: Harvard University Press)

Colson, Elizabeth (1974) Tradition and Contract (Chicago: Aldine)

Ellickson, Robert C. (1991) Order Without Law (Cambridge: Harvard University Press)

Geertz, Clifford (1973a) “Deep Play: Notes on the Balinese Cockfight” in Clifford Geertz The Interpretation of Cultures, pp. 412-53

Geertz, Clifford (1973b) “Thick Description” in Clifford Geertz The Interpretation of Cultures, pp. 3-30.

Heckathorn, Douglas D. (1989) “Collective Action and the Second-Order Free-Rider Problem” Rationality and Society 1, 1: 78-100.

Kreps, David (1990) “Corporate Culture and Economic Theory” in James Alt and Kenneth Shepsle Perspectives on Positive Political Economy (Cambridge: Cambridge University Press)

Ormerod, Paul (1999) Butterfly Economics (New York: Pantheon)

Schelling, Thomas C. (1963) The Strategy of Conflict (New York: Oxford University Press)

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