On the regulation of social norms

A model is developed to understand how norms can be influenced by "norm entrepreneurs," for example, lawmakers, government agencies, unions, etc. Two instruments of influencing the dynamics of norm-following behavior are analyzed, namely transforming the (monetary) incentives and changing the meaning or the reputational value of following a norm. Both forms of norm regulation are incorporated into Akerlof's model of social custom (1980), and the comparative static properties of norm destruction and norm creation for different types of norms are derived. In particular, it is shown how norms should be regulated when almost everybody follows them and when they take the form of bandwagon and snob norms.