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Laws and Norms: Experimental Evidence with Liability Rules

Author

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  • Bruno Deffains

    (CRED - Centre de Recherche en Economie et Droit - UP2 - Université Panthéon-Assas)

  • Romain Espinosa

    (CREM - Centre de recherche en économie et management - CNRS - Centre National de la Recherche Scientifique - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - UNICAEN - Université de Caen Normandie - NU - Normandie Université)

  • Claude Fluet

    (ULaval - Université Laval [Québec])

Abstract

We conduct an experiment where participants choose between actions that provide private benefits but may also impose losses on others. Three legal environments are compared: no law, strict liability for harm caused to third parties, and an efficiently designed negligence rule where damages are paid only when the harmful action generates a net social loss. Legal obligations are either perfectly enforced (Severe Law) or only weakly so (Mild Law), i.e., expected sanctions are then nondeterrent. We find that behavior can be rationalized in terms of individuals trading-off private benefits, net of legal liability, against the net uncompensated losses caused to others. The weight associated with non-incentivized efficiency concerns is increased by the introduction of a liability rule, whether deterrent or not, and there is evidence that the effect is stronger under strict liability than under the negligence rule.

Suggested Citation

  • Bruno Deffains & Romain Espinosa & Claude Fluet, 2019. "Laws and Norms: Experimental Evidence with Liability Rules," Post-Print halshs-02276435, HAL.
  • Handle: RePEc:hal:journl:halshs-02276435
    DOI: 10.1016/j.irle.2019.105858
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-02276435
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    Cited by:

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    3. Julien Jacob & Eve-Angéline Lambert & Mathieu Lefebvre & Sarah Van Driessche, 2021. "Information disclosure under liability: an experiment on public bads," Working Papers of BETA 2021-30, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
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    5. Rostislav Staněk & Ondřej Krčál & Katarína Čellárová, 2021. "Pull yourself up by your bootstraps: Identifying procedural preferences against helping others in the presence of moral hazard," MUNI ECON Working Papers 2021-11, Masaryk University.
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    More about this item

    Keywords

    social preferences; legal norms; social norms; liability rules; Behavioral law and economics;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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