This paper presents an idealized model of social interaction, where preferences are private information and individuals cannot condition their behavior on the identity of whom they are interacting with. An optimal decentralized benchmark rule is identified, where each individual imposes some...

In a simple model of social interaction I analyze the welfare effects of positive (prescriptive) and negative (proscriptive) social norms, together with the private incentives for their enactment. I find that imposing no law is socially optimal when individual actions have no significant...