The theory is intuitively correct for bilateral relationships, but obviously doesn't explain why a thousand people might choose to cooperate. People who are mature and patient will value future payoffs. If you know what investments you must make to assure the cooperation of others, you will make those investments. My concept of social norms refers to those behaviors people take to signal that they are good types. Examples might include how you dress, owning a nice car and giving to charity.
Cooperation is generally desirable, and signaling is part of that.
Social norms refer to the patterns of behavior that emerge as people signal their time preferences and other kinds of private information. Explain how crime shows how signaling and social norms should be part of government decisions. The government historically used shame to deter crime. Criminals were publicly identified and humiliated, and even branded. But once marked with a brand as a criminal, an individual was shunned by society and had no choice but to join a criminal gang.