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Abstract:
Everyone realizes the importance of social norms as guides to behavior and substitutes or complements for law. Coming up with a paradigm for analyzing norms, however, has been surprisingly difficult, as has systematic empirical study. In this chapter of the Handbook of Law and Economics, edited by A. Mitchell Polinsky and Steven Shavell and forthcoming in 2005, we survey the topic.

Norms, behavior, conventions, law

Abstract:
A behavioral economics literature identifies how behaviorally-derived assumptions affect the economic analysis of criminal law and public law enforcement. We review and extend that literature. Specifically, we consider the effect of cognitive biases, prospect theory, hedonic adaptation, hyperbolic discounting, fairness preferences, and other deviations from standard economic assumptions on the optimal rules for deterring potential offenders and for regulating (or motivating) potential crime victims, legislators, police, prosecutors, judges, and juries.

Abstract:
This article reviews the state of game theory in legal scholarship and finds that it remains excessively focused on one tool: the Prisoners' Dilemma. I claim that this focus is not justified, that it distracts legal scholars from exploiting other insights of game theory, particularly the problem of coordination. I show how the need for coordination is as pervasive and important to law as the Prisoners' Dilemma, illustrating with game theory discussions of constitutional law, international law, property disputes, traffic, culture, gender roles, and many other topics. I also explain how a focus on the Prisoners' Dilemma unnecessarily contributes to the divide between Law & Economics and Law & Society scholars, all of whom might find some common ground in exploring coordination games.

Abstract:
Economic theories of legal compliance emphasize legal sanctions, while psychological and sociological theories stress the perceived legitimacy of law. Without disputing the importance of either mechanism, we test a third way that law affects behavior, an expressive theory that claims law influences behavior by creating a focal point around which individuals coordinate. The focal point theory makes three claims: (1) that the need for coordination is pervasive because "mixed motive" games involving coordination model common disputes; (2) that, in such games, any third-party cheap talk that calls the players' attention to a particular equilibrium tends to produce that equilibrium; and (3) that law, by publicly endorsing a particular equilibrium, tends to call the players' attention to that outcome. After explaining the first and third claim, we offer an experimental test of the second. Specifically, we investigated how various forms of third party cheap talk influence the behavior of subjects in a Hawk/Dove or Chicken game. Despite the players' conflicting interests, we found that messages highlighting one equilibrium tend to produce that outcome. This result emerged when the message was selected by an overtly random, mechanical process, and also when it was delivered by a third-party subject; the latter effect was significantly stronger than the former only when the subject speaker was selected by a merit-based process. These results suggest that, in certain circumstances, law generates compliance not only by sanctions and legitimacy, but also by facilitating coordination around a focal outcome.

Abstract:
Frequent compliance with the adjudicative decisions of international institutions, such as the International Court of Justice, is puzzling because these institutions do not have the power domestic courts possess to impose sanctions. This paper uses game theory to explain the power of international adjudication via a set of expressive theories, showing how law can be effective without sanctions. When two parties disagree about conventions that arise in recurrent situations involving coordination (such as a convention of deferring to territorial claims of "first possessors"), the pronouncements of third-party legal decision-makers - adjudicators - can influence their behavior in two ways. First, adjudicative expression may construct "focal points" that clarify ambiguities in the convention. Second, adjudicative expression may provide "signals" that cause parties to update their beliefs about the facts that determine how the convention applies. Even without the power of sanctions or legitimacy, an adjudicator's focal points and signals influence the parties' behavior. After explaining the expressive power of adjudication, the paper applies the analysis to a range of third party efforts to resolve international disputes, including the first-ever review of the entire docket of the International Court of Justice. We find strong empirical support for the theory that adjudication works by clarifying ambiguous conventions or facts via cheap talk or signaling. We claim that the theory has broad implications for understanding the power of adjudication generally.

Abstract:
This brief chapter surveys some of the economic literature concerning the instrumental costs of material inequality. Economic theory predicts, and econometric evidence finds, that inequality increases crime and political corruption and, in certain circumstances, constrains growth.

Abstract:
Economic analysis generally assumes that law solves cooperation problems because legal sanctions change payoffs. Where the problem is one of coordination, however, this article contends that law also influences behavior by changing expectations, independent of payoffs. When individuals need to coordinate, law works to make one equilibrium "focal" and thereby creates expectations that others will play the strategy associated with that equilibrium. Once the expectations exist, they are self-fulfilling; even if the payoffs remain the same, everyone prefers to play the focal point strategy. Private expression can also change expectations, but law often has a comparative advantage in the publicity accorded to, and uniqueness of, its message, as well as the resulting reputation of public officials.

The focal effect is one way to explain how law influences behavior "expressively" by what it says, independent of the sanctions it imposes. The article initially demonstrates this result using a pure coordination game, but then broadens the analysis in two ways. First, the focal point exists even when individuals have conflicting interests, as long as they share a common interest in avoiding certain outcomes. Thus, focal points matter in "Hawk-Dove" games which plausibly model a substantial amount of real world conflict. In such situations, both adjudication and regulation have some expressive influence on behavior. Second, the focal effect exists in iterated situations where equilibria evolve over time. Legal focal points can influence behavior during disequilibrium and, in several ways, supplant an existing convention. These points are illustrated with examples of traffic regulation, a sanctionless anti-smoking law, and a law creating "imperfect" liability for landlords.

Abstract:
Economic analysis generally assumes that law solves cooperation problems because legal sanctions change payoffs. Where the problem is one of coordination, however, this article contends that law also influences behavior by changing expectations, independent of payoffs. When individuals need to coordinate, law works to make one equilibrium "focal" and thereby creates expectations that others will play the strategy associated with that equilibrium. Once the expectations exist, they are self-fulfilling; even if the payoffs remain the same, everyone prefers to play the focal point strategy. Private expression can also change expectations, but law often has a comparative advantage in the publicity accorded to, and uniqueness of, its message, as well as the resulting reputation of public officials.

The focal effect is one way to explain how law influences behavior "expressively" by what it says, independent of the sanctions it imposes. The article initially demonstrates this result using a pure coordination game, but then broadens the analysis in two ways. First, the focal point exists even when individuals have conflicting interests, as long as they share a common interest in avoiding certain outcomes. Thus, focal points matter in "Hawk-Dove" games which plausibly model a substantial amount of real world conflict. In such situations, both adjudication and regulation have some expressive influence on behavior. Second, the focal effect exists in iterated situations where equilibria evolve over time. Legal focal points can influence behavior during disequilibrium and, in several ways, supplant an existing convention. These points are illustrated with examples of traffic regulation, a sanctionless anti-smoking law, and a law creating "imperfect" liability for landlords.

Abstract:
Legal theorists often claim that law can influence behavior "expressively," by the message that it embodies, rather than through enforcement of the sanctions that it imposes. This paper identifies and analyzes one possible mechanism by which legislation can generate compliance, even in the absence of a deterrent effect. Under certain circumstances, legislation may reflect the legislature's superior aggregation of information; this can cause individuals to update their beliefs about underlying features of the world, and thereby change their behavior. The main example used in the paper is a ban on public smoking, which may cause individuals to update their beliefs about the health dangers of second-hand smoke. Even if the legislature has no special expertise on such an issue, the Condorcet Jury Theorem implies that, given certain assumptions, legislation may aggregate information in a way that provides information superior to that held by any individual citizen. The paper introduces this idea using a basic model in which legislators receive a private signal about the issue and vote sincerely. Then, the complications posed by strategic voting, coordination, position-taking preferences, interest group lobbying, and institutional features of legislative organization are analyzed. We conclude that there exists significant scope for legislation to influence behavior and behavioral norms by conveying information from legislatures to citizens.

Abstract:
In April, 2001, the University of Illinois College of Law hosted a symposium on empirical and experimental methods in legal scholarship. This introduction explains that the organizers deemed the symposium to be timely in that there has been a significant increase in the volume and importance of empirical work related to legal topics and the first tentative steps in applying experimental methods to the study of law. The authors of this introduction elaborate on these trends and then briefly describe the articles that were presented at the symposium and subsequently published in the University of Illinois Law Review.

The symposium had two principal parts. The articles in the first part lay out the general case for empirical and experimental work in law, explain some of the relevant techniques, and predict future trends in empirical legal research. The articles in the second part concentrate on empirical and experimental work in particular areas of the law, such as contract law, tort law, corporation law, legal history, criminal law and procedure, and public choice. Those articles summarize the work done thus far and the issues that that work has resolved and then lays out the questions that further empirical and experimental work must seek to answer. The symposium is dedicated to the memory of Professor Gary Schwartz, who participated and whose contribution on empirical work in tort law graces the proceedings.

Abstract:
In situations where people have an incentive to coordinate their behavior, law can provide a framework for understanding and predicting what others are likely to do. According to the focal point theory of expressive law, the law`s articulation of a behavior can sometimes create self-fulfilling expectations that it will occur. Existing theories of legal compliance emphasize the effect of sanctions or legitimacy; we argue that, in addition to sanctions and legitimacy, law can also influence compliance simply by making one outcome salient. We tested this claim in two experiments where sanctions and legitimacy were held constant. Experiment 1 demonstrated that a mandatory legal rule operating in a property dispute influenced compliance only when there is an element of coordination. Experiment 2 demonstrated that a default rule in a contract negotiation acted as a focal point for coordinating negotiation decisions. Both experiments confirm that legal rules can create a focal point around which people tend to coordinate in a mixed motive coordination game.

expressive law, legitimacy, compliance, coordination, negotiation, mixed motive games, hawk-dove game, chicken game, battle of the sexes game, default rules

Abstract:
In recent years, a number of mass shooting incidents have been perpetrated by offenders motivated by neo-Nazi or other racist ideology. Conventional economic analysis of crime appears to shed little light on such acts. We propose a model in which potential offenders care not only about the intrinsic benefits from the crime and the expected costs of punishment, but also about the esteem conferred by those who share the potential offender's ideology. The number of such individuals is not known to the potential offender with certainty; it is a random variable, the distribution of which enters into the potential offender's expected utility from committing the crime. We argue that, assuming that the potential offender is risk-averse in esteem, increasing the variance of the distribution of this random variable lowers the expected utility from the crime, and thus potentially 'deters' it. This result holds even when (as we assume) the potential offender has available an unbiased estimator of number of racists (so that the increased variance simply represents a mean-preserving spread). Furthermore, we argue that this variance depends on the (legal and nonlegal) regime governing hate speech. We also develop an asymmetric information model of speech regulation, in which individuals trade off their 'expressive utility' from voicing their opinions against the costs imposed by formal and/or informal sanctions on hate speech. If the sanctions are sufficiently large, there exist pooling equilibria, which create uncertainty about the number of racists and/or the intensity of their hatred. This uncertainty reduces the precision of the potential offender's estimate, and lowers the expected utility from hate crimes. We consider a number of possible caveats and extensions, and discuss the implications for hate speech regulation.

Abstract:
Economic analysis typically assumes that law changes the expected cost of behavior, and thereby changes behavior, only because it imposes legal sanctions. Another possibility is that law operates "expressively" - that it changes behavior by what it says rather than what it does. This article proposes an informal model to explain how law could have such an expressive effect. In the model, law changes the expected cost of behavior by signaling attitudes of approval or disapproval. The model assumes (1) that individuals value approval either intrinsically or instrumentally, (2) that individuals have only imperfect information about what others approve, and (3) that certain identifiable categories of legislation are positively correlated with diffuse public opinion. As a result, these categories of legislation cause individuals to update their prior beliefs about the approval pattern, and this updated belief produces behavioral change. As an example, anti-smoking legislation signals greater disapproval of public smoking, which raises the expected costs from public smoking, thereby decreasing such smoking independent of the legal sanctions. The article explores several implications of this attitudinal model of expressive law. One is that local ordinances have a greater expressive effect than state or federal laws, because most approval and disapproval occurs locally. Second, judicial decisions have an expressive effect because they are positively correlated with diffuse public opinion. Third, parties wishing to influence the behavior of others will invest in capturing the state's expressive power, with the result that there is substantial political conflict over what appear to be matters of pure symbolism.

Abstract:
Explaining the efficiency of laws against theft is a more complicated matter than it first appears to be. Fred McChesney (1993), responding to a 1990 article by Lewin and Trumbell, argues that theft is "inevitably" inefficient when the indirect costs of the activity are considered. McChesney traces his analysis to a 1967 paper by Gordon Tullock, in which Tullock discussed the inefficiency of theft, rent-seeking, and monopolies. Richard Posner (1985; 1992) provides a different line of reasoning that focuses on the direct costs of theft. He claims that, because the market is adept at transferring goods to their highest valued use, those who bypass the market -- thieves -- on average value the goods they steal less than the owners. Neither analysis of theft, however, is entirely sufficient to explain its inefficiency.As Part I of this paper explains, the Tullock-McChesney resolution is flawed. Notwithstanding the existence of indirect costs, theft is efficient if incurring those costs avoids incurring larger transaction costs from a voluntary sale and the thief values the goods more than the owner does. More generally, an efficiency analysis requires comparing the indirect costs of legalized theft with the transaction costs of market sales. In Part II, we make this comparison. Unsurprisingly, theft is inefficient, though for more complex and less certain reasons than the Tullock-McChesney thesis suggests: because indirect costs *usually* would exceed transaction costs and because indirect costs *often* would not avoid incurring transaction costs. The surprising result of our model is that Posner's theft analysis, while correct in a static model, turns out not to matter much to the dynamic inefficiency of theft. In equilibrium, very little of the costs of theft would be from transfers to lower valued users. Thus, we ultimately agree with Tullock and McChesney that the real problem with theft is its indirect costs. Finally, in Part III we discuss how this analysis bears on the criminal rules that define when involuntary takings constitute theft.

Abstract:
Explaining the efficiency of laws against theft is a more complicated matter than it first appears to be. Fred McChesney (1993), responding to a 1990 article by Lewin and Trumbell, argues that theft is "inevitably" inefficient when the indirect costs of the activity are considered. McChesney traces his analysis to a 1967 paper by Gordon Tullock, in which Tullock discussed the inefficiency of theft, rent-seeking, and monopolies. Richard Posner (1985; 1992) provides a different line of reasoning that focuses on the direct costs of theft. He claims that, because the market is adept at transferring goods to their highest valued use, those who bypass the market -- thieves -- on average value the goods they steal less than the owners. Neither analysis of theft, however, is entirely sufficient to explain its inefficiency.

As Part I of this paper explains, the Tullock-McChesney resolution is flawed. Notwithstanding the existence of indirect costs, theft is efficient if incurring those costs avoids incurring larger transaction costs from a voluntary sale and the thief values the goods more than the owner does. More generally, an efficiency analysis requires comparing the indirect costs of legalized theft with the transaction costs of market sales. In Part II, we make this comparison. Unsurprisingly, theft is inefficient, though for more complex and less certain reasons than the Tullock-McChesney thesis suggests: because indirect costs *usually* would exceed transaction costs and because indirect costs *often* would not avoid incurring transaction costs. The surprising result of our model is that Posner's theft analysis, while correct in a static model, turns out not to matter much to the dynamic inefficiency of theft. In equilibrium, very little of the costs of theft would be from transfers to lower valued users. Thus, we ultimately agree with Tullock and McChesney that the real problem with theft is its indirect costs. Finally, in Part III we discuss how this analysis bears on the criminal rules that define when involuntary takings constitute theft.

Abstract:
This short essay, written for a symposium commemorating Richard Posner's twenty-fifth year as a judge, examines Judge Posner's majority opinion for a closely divided en banc decision on the federal entrapment defense. The cases considers a fundamental issue in the meaning of the element of predisposition. Judge Posner crafts a boldly innovative reading of the Supreme Court precedent on the topic, introducing the element of position or readiness to predisposition. I claim the result, properly understood, is to rationalize the doctrine of entrapment.

undercover operations, entrapment, predisposition

Abstract:
The earliest economic theory of discrimination proposed the subsequently neglected idea of a "vicious circle" of discrimination (Myrdal,1944). We draw on psychological evidence (that people derive utility from believing that the world is just) to propose a behavioral economic model in which the vicious circle envisaged by Myrdal can arise. We demonstrate the power of this approach through an application to the issue of whether and how to justify penalty enhancements for hate crimes against members of disfavored groups. The crucial assumption is that individuals engage in biased inference in order to preserve their Belief in a Just World, thus attributing the disproportionate victimization of a group to that group's negative characteristics, rather than to the hate-motivated preferences of offenders. In a simple two-period setting, we show that disproportionate victimization of the disfavored group in the first period can lead to additional crime against that group in the second period. The reason is that potential offenders' inferences about the victimized group's characteristics become more negative as a consequence of disproportionate victimization, raising the net benefits of crime against that group (under the assumption that the benefits of crime depend partly on the victimized group's perceived characteristics). Our main result is that penalty enhancements can reduce the social harm due to these extra crimes.

Hate crimes, behavioral economics

Abstract:
In this contribution to a symposium on "Conformism," I comment on two of the many mechanisms producing conformity: coordination and esteem. First, I set forth one point about conformity in coordination settings - that there can be a strong stability to conventions in which the required behavior varies by the observable physical differences among human beings, such as sex and those that come to be associated with race. In a certain class of important games, observable personal differences work to "break symmetry," which significantly changes the possible outcomes to the game. Second, I explain the claim that human beings desire the esteem of others and then discuss how this simple preference can produce significant conformity. As with coordination, one implication is that esteem-seeking among strangers is likely to make behaviorally relevant the distinctions among individuals that even a stranger will know, i.e., observable physical traits, including sex and race. In both cases - coordination and esteem - I emphasize some inegalitarian (and illiberal) types of conformity.

Abstract:
This article provides a causal explanation of adjudicative compliance that is distinct from the court's threat of sanctions and its institutional legitimacy. The new mechanism for compliance is the power of adjudicative expression. The theory of "expressive adjudication" arises from a previously neglected synergy among three expressive concepts in game theory - a "correlated equilibrium," a "focal point," and a signal. The article identifies the circumstances in which adjudicative expression can, by itself, influence the behavior of existing disputants and of future potential disputants. In each case, ambiguity in the relevant facts or the concepts underlying intentional and spontaneous order can cause a conflict that clarifying expression resolves. This expressive power explains otherwise puzzling instances of compliance with tribunals that lack the power of sanctions and unifies theories of third-party norm enforcement with a theory of legal sanctions. Finally, the article examines certain normative implications of the expressive theory, including a novel function of adjudicative impartiality, a new justification for the system of public adjudication (a judiciary), and a trade-off between dispute resolution and dispute avoidance.

Abstract:
Economic theories of legal compliance emphasize legal sanctions, while psychological and sociological theories stress the perceived legitimacy of law. Without disputing the importance of either mechanism, we test a third way that law affects behavior, an expressive theory that claims law influences behavior by creating a focal point around which individuals coordinate. We argue that mixed motive games involving coordination model many common disputes, and that, in such games, any third-party cheap talk, including legal rules, that calls the players' attention to a particular equilibrium tends to produce that equilibrium. We investigated how various forms of third party cheap talk influence the behavior of subjects in a Hawk/Dove or Chicken game. Despite the players' conflicting interests, we found that messages highlighting one equilibrium tend to produce that outcome. This result emerged when the message was selected by an overtly random, mechanical process, and also when it was delivered by a third-party subject; the latter effect was significantly stronger than the former only when the subject speaker was selected by a merit-based process. These results suggest that, in certain circumstances, law generates compliance not only by sanctions and legitimacy, but also by facilitating coordination around a focal outcome.

law and social conflict, law and dispute resolution, law and decision making

Abstract:
The entrapment defense is the primary regulation of undercover operations. Though courts and commentators say that the state should not punish an undercover defendant who does not offend outside such operations, no existing theory fully justifies this principle or the defense (without calling into question basic commitments of American criminal law): (1) Under retributive theory, the entrapped are blameworthy, given that a defendant who succumbs to the same temptation from a private party is blameworthy. (2) Fairness theories fail to justify the defense, given that existing law refuses to recognize unfairness in particular distributions of criminal temptations or in highly selective law enforcement. (3) Existing institutional theories fail to explain the precise political danger of entrusting officials with the power of undercover operations, given that targets can refuse criminal opportunities. (4) Among other problems, existing economic theories rest on a false dichotomy between true offenders who commit crimes outside of undercover operations and false offenders who don't.

The paper reconstructs the latter two theories, overcoming existing weaknesses to fully justify the defense. The institutional theory rests on the high degree of fortuity to an individual's legal compliance, the state manipulation of which creates a serious risk of political abuse. The economic theory arises from the need to correct a principal-agent problem that motivates police to favor unproductive tactics yielding high numbers of low value arrests (even if the resulting offenders are not "false"). These theories reveal that the normative consensus is misguided; the defense should not be conceived as a way of protecting individual defendants who do not offend outside undercover operations. The two rationales point to the desirability of tailoring a specific entrapment defense to each crime, but the paper also describes the best unitary defense.

Abstract:
The entrapment defense is the primary legal regulation of undercover operations. Though courts and commentators say that the state should not punish an undercover defendant who does not offend outside such operations, no existing theory fully justifies this principle or the defense (without calling into question basic commitments of American criminal law): (1) Under retributive theory, the entrapped are blameworthy, given that a defendant who succumbs to the same temptation from a private party is blameworthy. (2) Fairness theories fail to justify the defense, given that existing law refuses to recognize unfairness in particular distributions of criminal temptations or in selective law enforcement. (3) Existing institutional theories fail to explain the precise political danger of entrusting officials with the power of undercover operations, given that targets can refuse criminal opportunities. (4) Among other problems, existing economic theories rest on a untenable dichotomy between "true" offenders who commit crimes outside of undercover operations and "false" offenders who don't.

The paper reconstructs the latter two theories, overcoming existing weaknesses to fully justify the defense. The institutional theory rests on the high degree of fortuity to an individual's legal compliance, the state manipulation of which creates a serious risk of political abuse. The economic theory arises from the need to correct a principal-agent problem that motivates police to favor unproductive tactics yielding high numbers of low value arrests (even if the resulting offenders are not false). These theories reveal that the normative consensus is misguided; the defense should not be conceived as a way of protecting individual defendants who do not offend outside undercover operations. The two rationales point to the desirability of tailoring a specific entrapment defense to each crime, but the paper also describes the best unitary defense.

entrapment, undercover, police

Abstract:
In The Pathological Politics of Criminal Law, Bill Stuntz provides a powerful critique of the modern American criminal justice system. Other commentators have criticized legislatures for constantly adding to an already overbroad set of criminal prohibitions. Stuntz explains the political dynamic that makes this outcome inevitable. The ultimate result is that the modern prosecutor defines what is criminal by her selection of cases to charge, while criminal legislation is a mere "side-show." Stuntz concludes that this state of affairs is "lawless" and pathological. As a solution, he proposes that courts resurrect or expand certain constitutional doctrines to reclaim some of the power now wielded by prosecutors. In this core text, I summarize and comment on Stuntz's argument.

Abstract:
This paper analyzes how speech may influence behavior by revealing social attitudes. As our main example, we focus on the possible effect of hate speech on hate crime. In our model, potential offenders care about esteem conferred by like-minded individuals whose numbers are uncertain but can be inferred from the level of hate speech. When individuals trade off expressive utility from voicing their true opinions against formal and informal sanctions imposed on hate speech, the sanctions affect what views are expressed in equilibrium. After specifying a set of conditions under which the speech equilibrium has no effect on behavior, we then relax these assumptions one at a time, taking into account relevant psychological evidence. The assumptions with the strongest empirical support (the fundamental attribution error in inference and the concavity of utility in esteem) imply that raising the costs of engaging in hate speech will tend to deter hate crime.

Abstract:
We argue that legislation can generate compliance expressively, independently of deterrence. The Condorcet Jury Theorem implies that, in certain circumstances, the legislative process
aggregates the private information of legislators to reach a
decision superior to that of any individual legislator.
Citizens may update their beliefs about issues the legislation
addresses even though individual legislators are no better
informed than individual citizens, and change their behavior in
the direction of greater compliance. We first use a model with
sincere voting, and then consider strategic voting,
position-taking preferences, lobbying, and legislative
institutions. We use a public smoking ban for illustration,
and propose an experimental test.

Condorcet Jury Theorem, Expressive effect of law, Legislation, Voting, Position-taking preferences, Lobbying, Legislative institutions

Abstract:
This paper reviews Eric Posner's book "Law and Social Norms" (2000). Posner explains norms as arising from a game in which individuals seek to attract cooperative opportunities by signaling a low discount rate. Individuals with low discount rates are more likely than those with high discount rates to cooperate in iterated prisoner dilemma situations. They are also more willing to bear immediate costs to attract future opportunities. Consequently, Posner claims that any costly behavior can attract cooperative opportunities by signaling low discount rates. All that is necessary is that a "norm entrepreneur" make nearly everyone recognize that a given behavior serves as such a signal, thus making the behavior a norm.

After explaining Posner's thesis in greater detail, I examine a few of his applications: norms concerning gift-giving, family, conspicuous consumption, and race discrimination. I then criticize the general theory on five grounds: (1) Because he offers no explanation as to why some norm entrepreneurs succeed and others fail, the theory is consistent with almost any behavioral result and appears to be impossible to falsify. Moreover, though standard economic theory can usually identify what costly behaviors are investments, the signaling model makes every costly behavior a potential investment, so that virtually any behavioral result is consistent with economic theory. (2) Posner does not consider concealed cheating. Because those with low discount rates will invest more heavily in concealing their cheating than those with high discount rates, it will not always pay to signal a low discount rate, a point which greatly complicates the signaling story. (3) The model implausibly implies that norms are weak in small, stable, and integrated communities; that the aged obey social norms less than everyone else; and that individuals never volunteer information that confirms their discounting of the future. (4) Most of the behaviors that Posner discusses are extraordinarily noisy signals of one's discount rate. Because standard reputation-building is a less noisy means of attracting cooperative partners, the model seriously overestimates the importance of signaling in a global equilibrium. (5) As a formal matter, the signaling model implausibly excludes normative motivations, though Posner relies on them in an ad hoc manner to explain particular results. The model's reductionism thus rejects strong intuitions about the importance of normative motivations without providing any compensating advantage in predictive power. Finally, I explain why one of Posner's applications, concerning gift-giving norms, avoids most of these criticisms and remains quite powerful.

norms, signaling, discount rates, reductionism, gifts, race discrimination, conspicuous consumption

Abstract:
This entry defines and distinguishes the concepts of convention and norm. Both terms refer to behavioral regularities. Lewis (1969) provisionally (and roughly) defined a convention as the set of coordinated expectations that solve a recurrent coordination problem. More recent game theory implies a broader definition: that a convention is a prevailing Nash equilibrium, and its attendant expectations, in a situation with at least one alternative equilibrium. The existence of multiple equilibria captures the intuition that conventions are arbitrary. By contrast, the central feature of a norm is that the behavioral regularity is supported, at least in part, by the fact that most or all individuals in the relevant population approve of conformity to the regularity and/or disapprove of non-conformity. The existence of normative approval or disapproval captures the intuition that norms are obligatory. Conventions and norms are distinct because norms need not be arbitrary (there may be no other possible equilibrium) and conventions need not be supported by approval or disapproval. Nonetheless, many actual behavioral regularities are both conventions and norms.

convention, norm

Abstract:
In United States v. Armstrong, the Supreme Court held that trial judges may not grant a defendant discovery on a selective prosecution claim based on evidence that most or all of those charged with a crime belong to one race, but that the defendant must also provide "some evidence" that the government failed to prosecute similarly situated offenders of another race. The article criticizes this rule for several reasons. First, the Court overestimates the ability of defendants who are targeted on account of race to meet this standard. Defendants with meritorious claims will be unable to find unprosecuted offenders, for example, when the offense occurs in private and the selectivity takes the form of nonenforcement against members of other races. Second, the Court fails to create an appropriate test because it does not discuss more generally what facts are necessary to suggest that race and the decision to prosecute are correlated. The Court seems not to be aware that the evidence it requires is not sufficient to demonstrate a correlation, yet extending the Armstrong analysis to all evidence necessary for a correlation would prevent discovery in virtually any case. In contrast, the article describes an alternative test that would be sensitive to all the facts relevant to a correlation but would not prove insurmountable for defendants with meritorious claims.

Finally, the article considers two fundamental, underlying criticisms of selective prosecution doctrine that might justify Armstrong: (1) that there is little or no racially selective prosecution and (2) that victims of selective prosecution do not merit the remedy of dismissal. The latter objection may be based on a utilitarian argument that dismissals undermine deterrence or a retributive argument that criminals deserve punishment regardless of how others are punished. Upon analysis, the article finds that prosecutor's offices are likely to discriminate as much as other actors in society, that there are utilitarian and retributive reasons to dismiss racially selective prosecutions, and that none of the criticisms justify the Armstrong rule.

Abstract:
This entry reviews experimental economics research relevant to law and economics. The introduction includes a brief discussion of experimental methodology and a survey of the categories of experiments relevant to law and economics, with citations to other reviews and compilations. The entry then reviews two series of economics experiments particularly important to law: those relating to the Coase theorem and those relating to pre-trial bargaining and settlement.