What Makes Law to Change Behavior? An Experimental Study

Rustam Romaniuc
  • 1 IEL, University of Turin, Turin, Italy
  • 2 LAMETA, University of Montpellier, Montpellier, France
Rustam Romaniuc

Abstract

The use of mild laws to affect people’s behavior is pervasive – from environmental regulation to tort law – but little is known about how the law changes human behavior and social outcomes when it uses non-deterrent monetary incentives. We find that when low monetary incentives are framed so as to indicate what is group desirable behavior, people behave more cooperatively in a public goods game than when no-incentives exist. However, we find that the effect is transitory. Surprisingly, the effect is long lasting when low monetary incentives are presented as payments for some neutral behavior – that is, when the fine is presented as a mere price change. Our findings suggest that the indication of what is group desirable behavior makes salient the conflict between people’s normative expectations and what others effectively do. This undermines conditional cooperators’ own motivation to contribute to public goods. Neutrally framed price-incentives have a long lasting positive effect on contribution decisions because it does not indicate what one should do and thus avoids the conflict with what others effectively do.

  • Allingham, M.G., and A. Sandmo. 1972. “Income Tax Evasion: A Theoretical Analysis,” 1 Journal of Public Economics 323–338.

  • Andreoni, J. 1995. “Warm-Glow versus Cold-Pickle: The Effects of Positive and Negative Framing on Cooperation in Experiments,” 37 Quarterly Journal of Economics 291–304.

  • Andreoni, J., B. Erard, and J. Feinstein. 1998. “Tax Compliance,” 36(2) Journal of Economic Literature 818–860.

  • Andreoni, J., and J.H. Miller. 2002. “Giving According To GARP: An Experimental Test of the Consistency of Preferences for Altruism,” 70(2) Econometrica 737–753.

  • Andreoni, J., and L.K. Gee. 2012. “Gun for Hire: Delegated Enforcement and Peer Punishment in Public Goods Provision,” 96(11–12) Journal of Public Economics 1036–1046.

  • Andrighetto, G., J. Brandts, R. Conte, J. Sabater-Mir, H. Solaz, and D. Villatoro. 2013. “Punish and Voice: Punishment Enhances Cooperation When Combined with Norm-Signalling,” 8(6) Plos One 1–8.

  • Baldassarri, D., and G. Grossman. 2011. “Centralized Sanctioning and Legitimate Authority Promote Cooperation in Humans,” 108(27) Proceedings of the National Academy of Sciences 11023–11027.

  • Bardsley, N., and P.G. Moffatt. 2000. “An econometric Analysis of Voluntary Contributions: The Random Effects Two-Limit p-Tobit Model,” Tinbergen Institute Discussion Paper TI-2000-111/1.

  • Bazart, C., and M. Pickhardt. 2011. “Fighting Income Tax Evasion with Positive Rewards,” 39(1) Public Finance Review 124–149.

  • Becker, G.S. 1968. “Crime and Punishment: An Economic Approach,” 76 Journal of Political Economy 169–217.

  • Benabou, R., and J. Tirole. 2011. “Laws and Norms,” CEPR discussion paper No. 8663.

  • Bicchieri, C. 2006. The Grammar of Society: The Nature and Dynamics of Social Norms. Cambridge: Cambridge University Press.

  • Bicchieri, C., and E. Xiao. 2009. “Do the Right Thing: But Only if Others Do so,” 22(2) Journal of Behavioral Decision Making 191–208.

  • Bowles, S., and S. Polania-Reyes. 2012. “Economic Incentives and Social Preferences: Substitutes or Complements?” 50(2) Journal of Economic Literature 368–425.

  • Calabresi, G. 1961. “Some Thoughts on Risk Distribution and the Law of Torts,” 70(4) Yale Law Journal 499–553.

  • Chaudhuri, A. 2011. “Sustaining Cooperation in Laboratory Public Goods Experiments: A Selective Survey of the Literature,” 14 Experimental Economics 47–83.

  • Convery, F., S. McDonnell, and S. Ferreira. 2007. “The Most Popular Tax in Europe? Lessons From the Irish Plastic Bags,” 38 Environmental Resource Economics 1–11.

  • Cooter, R.D. 1984. “Prices and Sanctions,” 84 Columbia Law Review 1523–1560.

  • Cooter, R.D. 1998. “Expressive Law and Economics,” 27(2) Journal of Legal Studies 585–608.

  • Cooter, R.D., and T. Ulen. 1988. Law and Economics. London: Scott, Foresman and Company.

  • Crawford, V.P., U. Gneezy, and Y. Rottenstreich. 2008. “The Power of Focal Points Is Limited: Even Minute Payoff Asymmetry May Yield Large Coordination Failures,” 98(4) American Economic Review 1443–1458.

  • Croson, R. 2002. “Why and How to Experiment: Methodologies From Experimental Economics,” 45 University of Illinois Law Review 921–945.

  • Dal, B.E., and P. Dal Bo. 2014. ““Do the Right Thing”: The Effects of Moral Suasion on Cooperation,” 117 Journal of Public Economics 28–38.

  • Dawes, R.M., and R.H. Thaler. 1988. “Anomalies: Cooperation,” 2(3) Journal of Economic Perspectives 187–197.

  • DeAngelo, G., and G. Charness. 2012. “Deterrence, Expected Cost, Uncertainty and Voting: Experimental Evidence,” 44(1) Journal of Risk and Uncertainty 73–100.

  • Drago, F., R. Galbiati, and P. Vertova. 2009. “The Deterrent Effects of Prison: Evidence from a Natural Experiment,” 117(2) Journal of Political Economy 257–280.

  • Ehrlich, I. 1972. “The Deterrent Effect of Criminal Law Enforcement,” 1(2) Journal of Legal Studies 259–276.

  • Ehrlich, I. 1975. “The Deterrent Effect of Capital Punishment: A Question of Life and Death,” 65(3) American Economic Review 397–417.

  • Elster, J. 1989. “Social Norms and Economic Theory,” 3(4) Journal of Economic Perspectives 99–117.

  • Engel, C. 2014. “Social Preferences Can Make Imperfect Sanctions Work: Evidence from a Public Good Experiment,” 108 Journal of Economic Behavior and Organization 343–353.

  • Feldman, Y. 2009. “The Expressive Function of Trade Secret Law: Legality, Cost, Intrinsic Motivation, and Consensus,” 6(1) Journal of Empirical Legal Studies 177–212.

  • Feldman, Y. 2011. “The Complexity of Disentangling Intrinsic and Extrinsic Compliance Motivations: Theoretical and Empirical Insights From the Behavioral Analysis of Law,” 35 Washington University Journal of Law & Policy 11–51.

  • Feldman, Y., and O. Lobel. 2010. “The Incentives Matrix: The Comparative Effectiveness of Rewards, Liabilities, Duties, and Protections for Reporting Illegality,” 88(6) Texas Law Review 1151–1211.

  • Fischbacher, U., S. Gaechter, and E. Fehr. 2001. “Are People Conditionally Cooperative? Evidence from a Public Goods Experiment,” 71 Economics Letters 397–404.

  • Fluet, C., and R. Galbiati. 2015. “Lois et normes: Les enseignements de l’economie comportementale,” CIRANO scientific series No. 2015s–43.

  • Frey, B.S., and A. Stutzer. 2007. Economics and Psychology: A Promising New Cross-Disciplinary Field. Cambridge, MA: MIT Press.

  • Galbiati, R., and P. Vertova. 2014. “How Laws Affect Behavior: Obligations, Incentives, and Cooperative Behavior,” 38 International Review of Law and Economics 48–57.

  • Gneezy, U., and A. Rustichini. 2000. “A Fine Is a Price,” 29 Journal of Legal Studies 1–17.

  • Gneezy, U., S. Meier, and P. Rey-Biel. 2011. “When and Why Incentives (Don’t) Work to Modify Behavior,” 25(4) Journal of Economic Perspectives 191–210.

  • Goeree, J.K., C.H. Holt, and S.K. Laury. 2002. “Private Costs and Public Benefits: Unraveling the Effects of Altruism and Noisy Behavior,” 83 Journal of Public Economics 255–276.

  • Grenier, B. 2004. “An Online Recruitment System for Economic Experiments,” in K. Kremer, and V. Macho eds. Forshung Und Wissenschaftliches Rechnen, 63, 79–93. Ges. für Wiss. Datenverarbeitung, Göttingen: GWDG Bericht.

  • Hoerisch, H., and S. Strassmair. 2012. “An Experimental Test of the Deterrence Hypothesis,” 28(3) Journal of Law, Economics, and Organization 447–459.

  • Homonoff, T. 2013. “Can Small Incentives Have Large Effects? The Impact of Taxes Versus Bonuses on the Demand for Disposable Bags,” Princeton University Working Paper 575.

  • Karakostas, A., and D.J. Zizzo. 2016. “Compliance and the Power of Authority,” 124 Journal of Economic Behavior and Organization 67–80.

  • Keser, C., and F. van Winden. 2000. “Conditional Cooperation and Voluntary Contributions to Public Goods,” 102(1) Scandinavian Journal of Economics 23–39.

  • Khadjavi, M. 2015. “Deterrence Works for Criminals,” European Journal of Law and Economics, DOI 10.1007/s10657-015-9483–2

  • Kornhauser, L.A. 1988. “The New Economic Analysis of Law: Legal Rules as Incentives,” in N. Mercuro, ed. Law and Economics. Springer Netherlands: Kluwer Academic Publishers.

  • Ledyard, O. 1995. “Public Goods: Some Experimental Results,” in J. Kagel and A. Roth, eds. Handbook of Experimental Economics. New York: Princeton University Press.

  • Lessig, L. 1996. “Social Meaning and Social Norms,” 144 University of Pennsylvania Law Review 2181–2189.

  • Luttmer, E.F.P., and M. Singhal. 2014. “Tax Morale,” 28(4) Journal of Economic Perspectives 149–168.

  • Marciano, A., and R. Romaniuc. 2015. “Accident Costs, Resource Allocation and Individual Rationality: Blum, Kalven, and Calabresi,” 22(6) European Journal of the History of Economic Thought 1084–1114.

  • McAdams, R. 2000. “A Focal Point Theory of Expressive Law,” 86(1649) Virginia Law Review 1729.

  • McAdams, R. 2015. The Expressive Powers of Law: Theories and Limits. Cambridge: Harvard University Press.

  • Milgram, S. 1963. “Behavioral Study of Obedience,” 67 Journal of Abnormal Social Psychology 371–378.

  • Mulder, L.M. 2016. “When Sanctions Convey Moral Norms,” European Journal of Law and Economics, doi:

    • Crossref
    • Export Citation
  • Ostrom, E., J. Walker, and R. Gardner. 1992. “Covenants with and Without a Sword: Self-Governance Is Possible,” 86(2) American Political Science Review 404–417.

  • Polinsky, M.A., and S. Shavell. 1979. “The Optimal Tradeoff between the Probability and Magnitude of Fines,” 69(5) American Economic Review 880–891.

  • Polinsky, M.A., and S. Shavell. 2000. “The Fairness of Sanctions: Some Implications for Optimal Enforcement Policy,” 2(2) American Law and Economics Review 223–237.

  • Posner, R.A. 1973. Economic Analysis of Law. New York: Little, Brown and Co.

  • Romaniuc, R., K. Farrow, L. Ibanez, and A. Marciano. 2016. “The Perils of Government Enforcement,” 166(1–2) Public Choice 161–182.

  • Schelling, T. 1960. The Strategy of Conflict. Cambridge: Harvard University Press.

  • Shavell, S. 2004. Foundations of Economic Analysis of Law. Cambridge: Harvard University Press.

  • Stigler, G. 1970. “The Optimum Enforcement of Laws,” 78(3) Journal of Political Economy 55–67.

  • Sunstein, C. 1996. “On the Expressive Function of Law,” 144 University of Pennsylvania Law Review 2021–2053.

  • Sunstein, C.R., D. Schkade, and D. Kahneman. 2000. “Do People Want Optimal Deterrence?” 29(1) Journal of Legal Studies 237–253.

  • Torgler, B. 2004. “Moral Suasion: An Alternative Tax Policy Strategy? Evidence From a Controlled Field Experiment in Switzerland,” 5 Economics of Governance 235–253.

  • Tyran, J.R., and L.P. Feld. 2006. “Achievieng Compliance When Legal Sanctions Are Non-Deterrent,” 108 Scandinavian Journal of Economics 135–156.

  • Vaillant, N.G., and J.-C. Wolff. 2010. “Broken Windows Theory and Marginal Deterrence: Does the Punishment of Minor Sexual Offenses Deter Rapes? Evidence From French Panel Data,” 30(1) European Journal of Law and Economics 59–71.

  • Veblen, T. 1889. The Theory of the Leisure Class: An Economic Study of Institutions. London: Macmillan.

  • Zizzo, D.J. 2010. “Experimenter Demand Effects in Economic Experiments,” 13(1) Experimental Economics 75–98.

Purchase article
Get instant unlimited access to the article.
$42.00
Log in
Already have access? Please log in.


Journal + Issues

The Review of Law & Economics (RLE) is published in cooperation with the European Association of Law and Economics (EALE) and De Gruyter. The Review publishes theoretical and empirical interdisciplinary research in law and economics-related subjects. The Journal explores the various understandings that economic approaches shed on legal institutions.

Search