IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Laws and Norms

  • Benabou, Roland

    ()

    (Princeton University)

  • Tirole, Jean

    ()

    (IDEI)

This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation. Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people's perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate, but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgements and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual punishments", irrespective of effectiveness considerations, in order to express their being "civilized".

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://ftp.iza.org/dp6290.pdf
Download Restriction: no

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6290.

as
in new window

Length: 47 pages
Date of creation: Jan 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6290
Contact details of provider: Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org

Order Information: Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Email:


References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Andrew F. Daughety & Jennifer F. Reinganum, 2010. "Public Goods, Social Pressure, and the Choice between Privacy and Publicity," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 191-221, May.
  2. Glenn Harrison & John List, 2004. "Field experiments," Artefactual Field Experiments 00058, The Field Experiments Website.
  3. Xiao, Erte, 2013. "Profit-seeking punishment corrupts norm obedience," Games and Economic Behavior, Elsevier, vol. 77(1), pages 321-344.
  4. Stefano DellaVigna & John A. List & Ulrike Malmendier, 2009. "Testing for Altruism and Social Pressure in Charitable Giving," NBER Working Papers 15629, National Bureau of Economic Research, Inc.
  5. Bruno Deffains & Claude Fluet, 2013. "Legal Liability when Individuals Have Moral Concerns," Journal of Law, Economics and Organization, Oxford University Press, vol. 29(4), pages 930-955, August.
  6. Paul Fischer & Steven Huddart, 2008. "Optimal Contracting with Endogenous Social Norms," American Economic Review, American Economic Association, vol. 98(4), pages 1459-75, September.
  7. Bicchieri, Cristina & Erte, Xiao, 2007. "Do the right thing: But only if others do so," MPRA Paper 4609, University Library of Munich, Germany.
  8. Andrea Prat, 2002. "The wrong kind of transparency," LSE Research Online Documents on Economics 3679, London School of Economics and Political Science, LSE Library.
  9. Dirk Sliwka, 2007. "Trust as a Signal of a Social Norm and the Hidden Costs of Incentive Schemes," American Economic Review, American Economic Association, vol. 97(3), pages 999-1012, June.
  10. Krupka, Erin & Weber, Roberto A., 2009. "The focusing and informational effects of norms on pro-social behavior," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 307-320, June.
  11. Lefèbvre, Mathieu & Pestieau, Pierre & Riedl, Arno & Villeval, Marie Claire, 2011. "Tax Evasion, Welfare Fraud, and "The Broken Windows" Effect: An Experiment in Belgium, France and the Netherlands," IZA Discussion Papers 5609, Institute for the Study of Labor (IZA).
  12. Jean-Robert Tyran & Lars P. Feld, 2005. "Achieving Compliance when Legal Sanctions are Non-Deterrent," CREMA Working Paper Series 2005-17, Center for Research in Economics, Management and the Arts (CREMA).
  13. Dan Ariely & Anat Bracha & Stephan Meier, 2007. "Doing good or doing well? Image motivation and monetary incentives in behaving prosocially," Working Papers 07-9, Federal Reserve Bank of Boston.
  14. Roland G. Fryer, Jr, 2010. "Financial Incentives and Student Achievement: Evidence from Randomized Trials," NBER Working Papers 15898, National Bureau of Economic Research, Inc.
  15. Samuel Bowles & Sandra Polanía Reyes, 2009. "Economic Incentives and Social Preferences: A Preference-based Lucas Critique of Public Policy," CESifo Working Paper Series 2734, CESifo Group Munich.
  16. Andrei Bremzen & Elena Khokhlova & Anton Suvorov & Jeroen van de Ven, 2015. "Bad News: An Experimental Study on the Informational Effects Of Rewards," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 55-70, March.
  17. Karlan, Dean & List, John, 2006. "Does Price Matter in Charitable Giving? Evidence from a Large-Scale Natural Field Experiment," Working Papers 13, Yale University, Department of Economics.
  18. Roberto Galbiatiy & Karl Schlagz & Joel van der Weele, 2010. "Sanctions that Signal: an Experiment," Levine's Working Paper Archive 661465000000001104, David K. Levine.
  19. Bar-Isaac Heski, 2012. "Transparency, Career Concerns, and Incentives for Acquiring Expertise," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 12(1), pages 1-15, January.
  20. Weibull, Jörgen & Villa, Edgar, 2005. "Crime, punishment and social norms," SSE/EFI Working Paper Series in Economics and Finance 610, Stockholm School of Economics.
  21. Julio J. Rotemberg, 2006. "Minimally acceptable altruism and the ultimatum game," Working Papers 06-12, Federal Reserve Bank of Boston.
  22. Tore Ellingsen & Magnus Johannesson, 2008. "Pride and Prejudice: The Human Side of Incentive Theory," American Economic Review, American Economic Association, vol. 98(3), pages 990-1008, June.
  23. Wolfgang Pesendorfer, 1993. "Design Innovation and Fashion Cycles," Discussion Papers 1049, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  24. Roberto Galbiati & Karl H. Schlag & Joël J Van Der Weele, 2013. "Sanctions that signal: An experiment," Sciences Po publications info:hdl:2441/7o52iohb7k6, Sciences Po.
  25. Andreas Fuster & Stephan Meier, 2009. "Another hidden cost of incentives: the detrimental effect on norm enforcement," Working Papers 09-2, Federal Reserve Bank of Boston.
  26. Daron Acemoglu & Matthew O. Jackson, 2011. "History, Expectations, and Leadership in Evolution of Cooperation," Levine's Working Paper Archive 786969000000000106, David K. Levine.
  27. Iris Bohnet & Bruno S. Frey & Steffen Huck, . "More Order with Less Law: On Contract Enforcement, Trust, and Crowding," IEW - Working Papers 052, Institute for Empirical Research in Economics - University of Zurich.
  28. Patricia Funk, 2007. "Is There An Expressive Function of Law? An Empirical Analysis of Voting Laws with Symbolic Fines," American Law and Economics Review, Oxford University Press, vol. 9(1), pages 135-159.
  29. Licht Amir N., 2008. "Social Norms and the Law: Why Peoples Obey the Law," Review of Law & Economics, De Gruyter, vol. 4(3), pages 715-750, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp6290. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.