Abstract

http://ssrn.com/abstract=2367791
 


 



Shallow Signals


Bert I. Huang


Columbia Law School; Harvard Law School

June 1, 2013

Harvard Law Review, Vol. 126, 2013
Columbia Law and Economics Working Paper No. 467
Columbia Public Law Research Paper No. 14-368

Abstract:     
Whether in dodging taxes, violating copyrights, misstating corporate earnings, or just jaywalking, we often follow the lead of others in our choices to obey or to flout the law. Seeing others act illegally, we gather that a rule is weakly enforced or that its penalty is not serious. But we may be imitating by mistake: what others are doing might not be illegal — for them.

Whenever the law quietly permits some actors to act in a way that is usually forbidden, copycat misconduct may be erroneously inspired by the false appearance that “others are doing it too.” The use of loopholes or exemptions can cause such illusions of misconduct. So can unseen licenses, cures, or private releases from liability. Selective enforcement, nonharmonization of laws, and legal transitions can also create similar misimpressions. The imitator sees others’ actions but not the crucial fact — of legal permission or tolerance — that distinguishes them. These behavior signals are “shallow,” missing a key dimension. The spread of misconduct can thus be accelerated by a peculiar, avoidable form of information failure.

For a regulator confronting this class of errors, it does little good to express the law in the conventional sense. What needs to be made more salient is not the law’s prohibition, but the fact of permission. This Essay offers an exploratory look at potential solutions, which vary by context and by whether actors are sophisticated or naive. Simple disclosures can sometimes do the job, but they can also be self-defeating due to what we might call an “ignorance externality.” Designing policies to work around such perverse effects may be possible, however, by drawing on heuristics introduced here.

Number of Pages in PDF File: 62

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Date posted: December 15, 2013 ; Last revised: January 25, 2014

Suggested Citation

Huang, Bert I., Shallow Signals (June 1, 2013). Harvard Law Review, Vol. 126, 2013; Columbia Law and Economics Working Paper No. 467; Columbia Public Law Research Paper No. 14-368. Available at SSRN: http://ssrn.com/abstract=2367791

Contact Information

Bert I. Huang (Contact Author)
Columbia Law School ( email )
435 West 116th Street
New York, NY 10025
United States
HOME PAGE: http://www.law.columbia.edu/fac/Bert_Huang
Harvard Law School ( email )
Cambridge, MA 02138
United States
HOME PAGE: http://www.law.harvard.edu//faculty/directory/11277/Huang/
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