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Formal law and customary change: A lab-in-field experiment in Ethiopia

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  • Cecchi, Francesco
  • Melesse, Mequanint Biset

Abstract

Do customary courts strategically adapt arbitration outcomes if they face increased competition by the formal law? Through a lab-in-field experiment with villagers and real customary judges in rural Ethiopia, we show that post-arbitration payouts to agents disfavored by the customary system are downwardly biased. Introducing a costly formal law reduces these biases and draws the decisions of customary judges significantly closer to the law. At the same time agents advantaged by the law do not exploit their increased bargaining power. Instead, they make offers that are less advantageous to themselves and, in equilibrium, only a fraction of them make direct use of the formal law. Our results suggest that local customary dispute resolution institutions may have a role to play in shifting preexisting customs toward a desired outcome. In areas where formal legal institutions have limited outreach, the effects of increased competition between formal law and customary legal institutions may rise from changes in the latter, rather than from plaintiffs seeking justice under the rule of law.

Suggested Citation

  • Cecchi, Francesco & Melesse, Mequanint Biset, 2016. "Formal law and customary change: A lab-in-field experiment in Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 67-85.
  • Handle: RePEc:eee:jeborg:v:125:y:2016:i:c:p:67-85 DOI: 10.1016/j.jebo.2016.01.006
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    Cited by:

    1. Pedro Naso & Erwin Bulte & Tim Swanson, 2017. "Can there be benefits from competing legal regimes? The impact of legal pluralism in post-conflict Sierra Leone," CIES Research Paper series 56-2017, Centre for International Environmental Studies, The Graduate Institute.

    More about this item

    Keywords

    Formal law; Social norms; Customary courts; Lab-in-field experiment; Ethiopia;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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