Beschreibung:
This paper probes the impact of cultural understanding on ethical decisions under uncertain conditions. We devise a two-player game model where players grapple with ambiguous payoff structures that could resemble a Prisoner’s Dilemma or a Coordination Game. Both games entail a Pareto-superior outcome, with the potential deviation gains shrouded in uncertainty. Deviating from the Pareto-superior outcome is considered immoral in a Coordination Game, but not in a Prisoner’s Dilemma.We examine two setups: a shared cultural understanding, where players unanimously believe the game is a Prisoner’s Dilemma, and a diverse cultural understanding, where each player holds a uniform belief about their opponent’s perception of encountering an honest partner. Our findings reveal that diverse cultural understanding can, under certain conditions, increase the probability of a Pareto-superior outcome.Nevertheless, our analysis highlights that cooperation likelihood generally dwindles in culturally diverse scenarios, largely due to challenges in accurately deciphering social cues. We also identify situations where the ex-ante probability of cooperation is heightened in diverse cultural settings, specifically when moral costs associated with defection are low and the benefits are high. Finally, we briefly discuss potential extensions of our model to encompass multi-player and multi-period settings, where players have the opportunity to develop a reputation for honesty