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Legal versus Normative Incentives under Judicial Error

  • Bruno Deffains
  • Claude Fluet

We analyze the complementarity between legal incentives (the threat of being held liable for damages) and normative incentives (the fear of social disapproval or stigma) in situations where instances of misbehavior are not perfectly observable. There may be multiple equilibria within a given legal regime, as well as multiple socio-legal equilibria. In particular, there are high stigma-high evidentiary standard regimes versus low stigma-low standard ones. We argue that this may explain some of the differences between common law and civil law regarding the notions of fault or negligence. Our analysis also provides an explanation for trends currently observed in civil-law systems, in particular the weakening of evidentiary requirements in tort cases.

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Paper provided by CIRPEE in its series Cahiers de recherche with number 0718.

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Date of creation: 2007
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Handle: RePEc:lvl:lacicr:0718
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  1. 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).
  2. Edward E. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," Harvard Institute of Economic Research Working Papers 1738, Harvard - Institute of Economic Research.
  3. Frey, Bruno S & Jegen, Reto, 2001. " Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
  4. Alon Harel & Alon Klement, 2007. "The Economics of Stigma: Why More Detection of Crime May Result in Less Stigmatization," The Journal of Legal Studies, University of Chicago Press, vol. 36(2), pages 355-377, 06.
  5. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
  6. Fehr, Ernst & Gächter, Simon, 2001. "Do Incentive Contracts Crowd Out Voluntary Cooperation?," CEPR Discussion Papers 3017, C.E.P.R. Discussion Papers.
  7. repec:dgr:kubcen:200556 is not listed on IDEAS
  8. Cooter, Robert & Porat, Ariel, 2001. "Should Courts Deduct Nonlegal Sanctions from Damages?," The Journal of Legal Studies, University of Chicago Press, vol. 30(2), pages 401-22, Part I Ju.
  9. Dominique Demougin & Claude Fluet, 2005. "Deterrence versus Judicial Error: A Comparative View of Standards of Proof," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(2), pages 193-, June.
  10. Richard H. McAdams & Eric B. Rasmusen, 2004. "Norms in Law and Economics," Working Papers 2004-11, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
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