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Legal Liability when Individuals Have Moral Concerns

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  • Bruno Deffains
  • Claude Fluet

Abstract

We incorporate normative motivations into the unilateral precaution model of tort. Individuals have moral concerns about causing harm and would like others to believe that they do. In the absence of legal liability, causing harm suggests low concerns and is therefore damaging to one's social image, which feeds back into incentives to take precautions. These nevertheless remain suboptimal when informal motivations are not strong enough for injurers to willingly compensate victims ex post. By contrast, perfectly enforced legal liability crowds out informal motivations completely (e.g., tortfeasors suffer no disesteem) but precautions are then efficient. Under imperfect enforcement, informal motivations and legal sanctions complement one another. With strict liability, individuals held liable suffer disesteem, there is some motivational crowding-out but no net crowding-out with respect to overall incentives. Under the negligence rule, there is motivational crowding-in when image concerns induce bunching on the legal due care standard. The Author 2012. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.

Suggested Citation

  • Bruno Deffains & Claude Fluet, 2013. "Legal Liability when Individuals Have Moral Concerns," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 29(4), pages 930-955, August.
    • Handle: RePEc:oup:jleorg:v:29:y:2013:i:4:p:930-955
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    File URL: http://hdl.handle.net/10.1093/jleo/ews002
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    Cited by:

    1. Chulyoung Kim & S. David Kim & Sangyoon Nam, 2018. "Strict Liability, Settlement, and Moral Concern," Working papers 2018rwp-137, Yonsei University, Yonsei Economics Research Institute.
    2. Christoph Rössler & Tim Friehe, 2020. "Liability, morality, and image concerns in product accidents with third parties," European Journal of Law and Economics, Springer, vol. 50(2), pages 295-312, October.
    3. Roland Benabou & Jean Tirole, 2011. "Laws and Norms," NBER Working Papers 17579, National Bureau of Economic Research, Inc.
    4. Baniak Andrzej & Grajzl Peter, 2013. "Equilibrium and Welfare in a Model of Torts with Industry Reputation Effects," Review of Law & Economics, De Gruyter, vol. 9(2), pages 265-302, October.
    5. Ayouni, Mehdi & Friehe, Tim & Gabuthy, Yannick, 2023. "Asking for information prior to settlement or trial when misrepresentation of evidence is possible," Mathematical Social Sciences, Elsevier, vol. 121(C), pages 26-35.
    6. Bruno Deffains & Claude Fluet, 2020. "Social Norms and Legal Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 36(1), pages 139-169.
    7. Julien Jacob & Eve-Angéline Lambert & Mathieu Lefebvre & Sarah Driessche, 2023. "Information disclosure under liability: an experiment on public bads," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 61(1), pages 155-197, July.
    8. Deffains, Bruno & Espinosa, Romain & Fluet, Claude, 2019. "Laws and norms: Experimental evidence with liability rules," International Review of Law and Economics, Elsevier, vol. 60(C).
    9. Claude Fluet & Rpbertp Galbiati, 2016. "Lois et normes : les enseignements de l'économie comportementale," L'Actualité Economique, Société Canadienne de Science Economique, vol. 92(1-2), pages 191-215.
    10. Claude Fluet & Tim Friehe, 2024. "Optimal law enforcement when individuals are either moral or norm followers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 26(1), February.
    11. Deffains Bruno & Demougin Dominique, 2011. "Class Actions, Compliance and Moral Cost," Review of Law & Economics, De Gruyter, vol. 7(2), pages 481-500, December.
    12. Bruno Deffains & Claude Fluet, 2013. "The Role of Social Image Concerns in the Design of Legal Regimes," Cahiers de recherche 1321, CIRPEE.
    13. Claude-Denys Fluet & Murat C. Mungan, 2017. "The Signal-Tuning Function of Liability Regimes," Cahiers de recherche 1707, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.

    More about this item

    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 - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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