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Legal versus Normative Incentives under Judicial Error

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  • Bruno Deffains
  • Claude Fluet

Abstract

We analyze the complementarity between legal incentives (the threat of being held liable for damages) and normative incentives (the fear of social disapproval or stigma) in situations where instances of misbehavior are not perfectly observable. There may be multiple equilibria within a given legal regime, as well as multiple socio-legal equilibria. In particular, there are high stigma-high evidentiary standard regimes versus low stigma-low standard ones. We argue that this may explain some of the differences between common law and civil law regarding the notions of fault or negligence. Our analysis also provides an explanation for trends currently observed in civil-law systems, in particular the weakening of evidentiary requirements in tort cases.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0718.

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Date of creation: 2007
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Handle: RePEc:lvl:lacicr:0718

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Keywords: Social interactions; socio-legal multiplier; stigma; judicial error; evidentiary standard;

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  1. Dominique Demougin & Claude Fluet, 2005. "Deterrence versus Judicial Error: A Comparative View of Standards of Proof," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(2), pages 193-, June.
  2. Bénabou, Roland & Tirole, Jean, 2004. "Incentives and Prosocial Behaviour," CEPR Discussion Papers 4633, C.E.P.R. Discussion Papers.
  3. Jean-Robert Tyran & Lars P. Feld, 2006. "Achieving Compliance when Legal Sanctions are Non-deterrent," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(1), pages 135-156, 03.
  4. Cooter, Robert & Porat, Ariel, 2001. "Should Courts Deduct Nonlegal Sanctions from Damages?," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 401-22, Part I Ju.
  5. Richard H. McAdams & Eric B. Rasmusen, 2004. "Norms in Law and Economics," Working Papers 2004-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  6. Ernst Fehr & Simon Gaechter, . "Do Incentive Contracts Crowd out Voluntary Cooperation?," IEW - Working Papers 034, Institute for Empirical Research in Economics - University of Zurich.
  7. Alon Harel & Alon Klement, 2007. "The Economics of Stigma: Why More Detection of Crime May Result in Less Stigmatization," The Journal of Legal Studies, University of Chicago Press, vol. 36(2), pages 355-377, 06.
  8. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
  9. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
  10. Galbiati, R. & Vertova, P., 2005. "Law and Behaviours in Social Dilemmas: Testing the Effect of Obligations on Cooperation," Discussion Paper 2005-56, Tilburg University, Center for Economic Research.
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