Pluralistic ignorance occurs and can be demonstrated in economic contexts
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Available literature notes that pluralistic ignorance applies to economic and business settings, such as inefficient norms regarding business corruption where participants privately dislike the practice while believing others support it.
The concept of pluralistic ignorance was introduced a century ago by social psychologist, Floyd Allport. It has been broadly applied in the social sciences, including psychology, sociology, political science, and economics. Pluralistic ignorance is a situation in which group members systematically misestimate their peers' attitudes, feelings, and private behaviors. This paper reviews the range of phenomena that pluralistic ignorance has been invoked to explain, the different accounts that have been offered for its emergence, and the various techniques that have been employed to dispel it. It distinguishes between micro and macro variants of pluralistic ignorance and discusses the challenges involved in generating a theory that encompasses both variants.
Norms of discrimination against women and blacks, norms of revenge still alive in some Mediterranean countries, and norms that everybody dislikes and tries to circumvent, such as the invisible norms of reciprocity that hold among the Iks studied by Turnbull, are all examples of unpopular and inefficient norms that often persist in spite of their being disliked as well as being obviously inefficient from a social or economic viewpoint. The world of business is not immune to this problem. In all those countries in which corruption is endemic, bribing public officials to get lucrative contracts is the norm, but it is often true that such a norm is disliked by many, and that it may lead to highly inefficient social outcomes (Bicchieri and Rovelli 1995). From a functionalist viewpoint such norms are anomalous, since they do not seem to fulfill any beneficial role for society at large or even for the social groups involved in sustaining the norm. In many cases it would be possible to gain in efficiency by eliminating, say, norms of racial discrimination, in that it would be possible to increase the well-being of a racial minority without harming the rest of society. To social scientists who equate persistence with efficiency, the permanence of inefficient norms thus presents an anomaly. They rest their case on two claims: when a norm is inefficient, sooner or later this fact will become evident. And evidence of inefficiency will induce quick changes in the individual choices that sustain the norm. That is, no opportunity for social improvement remains unexploited for long. Unfortunately, all too often this is not the case, and this is not because people mistakenly believe inefficient norms to be good or efficient.
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