A Third Model of Legal Compliance: Testing for Expressive Effects in a Hawk/Dove Game
AbstractEconomic theories of legal compliance emphasize legal sanctions, while psychological and sociological theories stress the perceived legitimacy of law. Without disputing the importance of either mechanism, we test a third way that law affects behavior, an expressive theory that claims law influences behavior by creating a focal point around which individuals coordinate. The focal point theory makes three claims: (1) that the need for coordination is pervasive because "mixed motive" games involving coordination model common disputes; (2) that, in such games, any third-party cheap talk that calls the players' attention to a particular equilibrium tends to produce that equilibrium; and (3) that law, by publicly endorsing a particular equilibrium, tends to call the players' attention to that outcome. After explaining the first and third claim, we offer an experimental test of the second. Specifically, we investigated how various forms of third party cheap talk influence the behavior of subjects in a Hawk/Dove or Chicken game. Despite the players' conflicting interests, we found that messages highlighting one equilibrium tend to produce that outcome. This result emerged when the message was selected by an overtly random, mechanical process, and also when it was delivered by a third-party subject; the latter effect was significantly stronger than the former only when the subject speaker was selected by a merit-based process. These results suggest that, in certain circumstances, law generates compliance not only by sanctions and legitimacy, but also by facilitating coordination around a focal outcome.
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- NEP-ALL-2004-07-26 (All new papers)
- NEP-EXP-2004-07-26 (Experimental Economics)
- NEP-LAW-2004-07-26 (Law & Economics)
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