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The Social Contract in Miniature: A Virtual Bargaining Theory of Social Interaction

Political philosophers from Hobbes to Rawls have attempted to explain the basis for the network of agreements and institutions that comprise the state through a notion of a social contract, to which members of a society implicitly subscribe. Can this idea be “scaled down” to capture even momentary interpersonal interactions? The virtual bargaining theory of social interactions aims to explain how we coordinate our behavior, communicate and create norms and conventions, through just such a process. The intuition is that a social coordination, in dyads, organizations, and societies, arise from implicit agreement concerning what ‘we’ should do; and complex institutions evolve from successive layers of simpler agreements. Virtual bargaining can be formalized using a non-standard game-theoretic framework and tested experimentally.