An on-going project investigating group formation, stereotyping and cultural evolution using an artificial society is outlined. agents culturally interact by exchanging behavioural rules and cultural markers. They economically interact by playing games of the Prisoners Dilemma. The mode of game play is novel because agents apply stochastic repeated game strategies not to individuals but to subjectively stereotyped groups (based on cultural makers). Agents consequently treat stereotyped groups as single players with whom they are involved in an on-going game of iterated PD. It is envisaged that such cultural processes may display a form of ""second order emergence" [11] in which agents come to recognise the cultural groupings that have emerged within the society. Some initial experimental results are presented with tentative observations.
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