If everybody looks to their peers to decide what to think about a person, the game implicitly turns into a Keynesian beauty contest, where popularity is determined by what others predict others predict others predict (and so on) other people like.
^ The negative aspect is that these reversals are often tangential to what anyone at all would prefer for themselves. As long as the core mechanics underlying pluralistic ignorance stay in effect, the culture will arbitrarily Abilene-paradox itself to places nobody wanted to go.
^ When cultures give Moloch free reign to shape them in His service, you quickly see them adopt the following rituals.
- Meta-level judgments: people are punished or rewarded according to what judgments they reveal.
- Absentee punishments: people are punished for insufficiently contributing to the meta-level judgments.
It's worth noting that correlated memeplexes with the above features will tend to win out over cultures without them.
^ At present, moderately healthy subcultures are able to survive because people vote with their feet (or find virtual bubbles) and more or less isolate from the rest of the world. Their survival depends on being visible enough that kindred spirits from afar can find them, but not so visible that belligerent cultures start to target them specifically with absentee punishments.
^ One positive aspect of living in a Keynesian culture is that norms can change at the blink of an eye, since it basically shares its underlying mechanics with what causes bank runs. If smart money says that other people will start predicting that other people will predict being gay is just fine, then people will start selling their investments in anti-gayness asap. (With the exception of subcultures where social status derives from reversing other subcultures.)