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Legal versus Normative Incentives under Judicial Error

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Author Info
Bruno Deffains
Claude Fluet

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

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Find related papers by JEL classification:
D8 - Microeconomics - - Information, Knowledge, and Uncertainty
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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  1. Alon Harel & Alon Klement, 2007. "The Economics of Stigma: Why More Detection of Crime May Result in Less Stigmatization," Journal of Legal Studies, University of Chicago Press, vol. 36, pages 355-377. [Downloadable!]
  2. Jean-Robert Tyran & Lars P. Feld, 2006. "Achieving Compliance when Legal Sanctions are Non-deterrent," Scandinavian Journal of Economics, Blackwell Publishing, vol. 108(1), pages 135-156, 03. [Downloadable!] (restricted)
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  3. Fehr, Ernst & Gächter, Simon, 2001. "Do Incentive Contracts Crowd Out Voluntary Cooperation?," CEPR Discussion Papers 3017, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!] (restricted)
    Other versions:
  5. Benabou, Roland & Tirole, Jean, 2003. "Incentives and Prosocial Behavior," IDEI Working Papers 389, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jan 2006. [Downloadable!]
    Other versions:
  6. Cooter, Robert & Porat, Ariel, 2001. "Should Courts Deduct Nonlegal Sanctions from Damages?," Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 401-22, Part I Ju.
  7. 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.
  8. 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. [Downloadable!]
  9. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Blackwell Publishing, vol. 15(5), pages 589-611, December. [Downloadable!] (restricted)
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