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Expressive Law: Framing or Equilibrium Selection?

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  • Bohnet, Iris
  • Cooter, Robert

Abstract

Law deters, educates, and coordinates. Economists typically focus on deterrence and sociologists often focus on education. Since deterrence causes marginal changes and education confronts relatively stable preferences, economists and sociologists may overlook law’s largest effects on behavior. We hypothesize that law’s largest effects come from coordination. Normative systems have multiple equilibria, so announcing a new law can change expectations and cause behavior to jump from one equilibrium to another. To demonstrate this possibility, we ran games with interdependent payoffs in which we simulated a law by telling experimental groups that choosing Left will result in a “penalty” ten percent of the time. We set the penalty too small to change the equilibria among rationally self-interested actors, thus eliminating deterrence effects. First we ran a PD game in which the penalty does not affect the uniquely dominant strategy of each player. In these circumstances, any change in behavior caused by announcing the penalty must result from more people acting morally and renouncing self-interest. In fact, announcing the penalty did not change the number of moral actors. Next we repeated the experiment in a crowding game with a uniquely dominant strategy for each player and obtained the same results as in the PD game. Finally, we ran a coordination game with multiple equilibria. Announcing the penalty caused jumps in behavior from one equilibrium to another. The power of the penalty to coordinate increased as the proportion of actors decreased whose cooperation was needed to tip the system to a Pareto-superior equilibrium.

Suggested Citation

  • Bohnet, Iris & Cooter, Robert, 2001. "Expressive Law: Framing or Equilibrium Selection?," Berkeley Olin Program in Law & Economics, Working Paper Series qt5h6970h8, Berkeley Olin Program in Law & Economics.
  • Handle: RePEc:cdl:oplwec:qt5h6970h8
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    Cited by:

    1. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    2. 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, March.
    3. Galbiati, Roberto & Schlag, Karl H. & van der Weele, Joël J., 2013. "Sanctions that signal: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 34-51.
    4. Ellingsen, Tore & Johannesson, Magnus & Mollerstrom, Johanna & Munkhammar, Sara, 2012. "Social framing effects: Preferences or beliefs?," Games and Economic Behavior, Elsevier, vol. 76(1), pages 117-130.
    5. Romaniuc Rustam, 2016. "What Makes Law to Change Behavior? An Experimental Study," Review of Law & Economics, De Gruyter, vol. 12(2), pages 447-475, July.
    6. Richard McAdams & Janice Nadler, "undated". "A Third Model of Legal Compliance: Testing for Expressive Effects in a Hawk/Dove Game," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1029, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    7. Bruno S. Frey & Susanne Neckermann, 2005. "Auszeichnungen: Ein Vernachl�ssigter Anreiz," IEW - Working Papers 254, Institute for Empirical Research in Economics - University of Zurich.
    8. Carbonara Emanuela & Parisi Francesco & von Wangenheim Georg, 2008. "Lawmakers as Norm Entrepreneurs," Review of Law & Economics, De Gruyter, vol. 4(3), pages 779-799, December.
    9. Galbiati, Roberto & Schlag, Karl H. & van der Weele, Joël J., 2013. "Sanctions that signal: An experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 34-51.
    10. Bruno S. Frey & Susanne Neckermann, 2006. "Auszeichnungen: Ein vernachlässigter Anreiz," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(2), pages 271-284, May.
    11. Carbonara, Emanuela & Parisi, Francesco & von Wangenheim, Georg, 2012. "Unjust laws and illegal norms," International Review of Law and Economics, Elsevier, vol. 32(3), pages 285-299.
    12. Christoph Engel & Michael Kurschilgen, 2011. "The Coevolution of Behavior and Normative Expectations. Customary Law in the Lab," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2011_32, Max Planck Institute for Research on Collective Goods.
    13. Renate Buijze & Christoph Engel & Sigrid Hemels, 2015. "Insuring Your Donation – An Experiment," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2015_16, Max Planck Institute for Research on Collective Goods, revised Jul 2016.
    14. Richard H. McAdams & Janice Nadler, 2005. "Testing the Focal Point Theory of Legal Compliance: The Effect of Third‐Party Expression in an Experimental Hawk/Dove Game," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 2(1), pages 87-123, March.
    15. Roberto Galbiati & Karl Schlag & Joël van der Weele, 2009. "Can sanctions induce pessimism? An experiment," Economics Working Papers 1150, Department of Economics and Business, Universitat Pompeu Fabra.
    16. Richard H. McAdams, 2011. "The Focal Point Theory of Expressive Law," Chapters, in: Francesco Parisi (ed.), Production of Legal Rules, chapter 10, Edward Elgar Publishing.
    17. Kaushik Basu, 2016. "Beyond the Invisible Hand: Groundwork for a New Economics," Economics Books, Princeton University Press, edition 1, number 9299.

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