Moral Rules, the Moral Sentiments, and Behavior: Toward a Theory of an Optimal Moral System
How should moral sanctions and moral rewardsâ€”the moral sentiments involving feelings of guilt and of virtueâ€”be employed to govern individualsâ€™ behavior if the objective is to maximize social welfare? In the model that we examine, guilt is a disincentive to act and virtue is an incentive because we assume that they are negative and positive sources of utility. We also suppose that guilt and virtue are costly to inculcate and are subject to certain constraints on their use. We show that the moral sentiments should be used chiefly to control externalities and further that guilt is best to employ when most harmful acts can successfully be deterred whereas virtue is best when only a few individuals can be induced to behave well. We also contrast the optimal use of guilt and virtue to optimal Pigouvian taxation and discuss extensions of our analysis.
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- Thaler, Richard H & Shefrin, H M, 1981.
"An Economic Theory of Self-Control,"
Journal of Political Economy,
University of Chicago Press, vol. 89(2), pages 392-406, April.
- H. M. Shefrin & Richard Thaler, 1977. "An Economic Theory of Self-Control," NBER Working Papers 0208, National Bureau of Economic Research, Inc.
- Louis Kaplow & Steven Shavell, 2001. "Moral Rules and the Moral Sentiments: Toward a Theory of an Optimal Moral System," NBER Working Papers 8688, National Bureau of Economic Research, Inc.
- Ken Binmore, 1998. "Game Theory and the Social Contract - Vol. 2: Just Playing," MIT Press Books, The MIT Press, edition 1, volume 2, number 0262024446, July. Full references (including those not matched with items on IDEAS)
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