Why People Obey the Law: Experimental Evidence from the Provision of Public Goods

Abstract:     
According to economists, severe legal sanctions deter violations of the law. According to legal scholars, people may obey law backed by mild sanctions because of norm-activation. We experimentally investigate the effects of mild and severe legal sanctions in the provision of public goods. The results show that severe sanctions almost perfectly deter free-riding. However, people also obey law backed by mild sanctions if it is accepted in a referendum. We show that voting for mild law induces expectations of cooperation, and that people tend to obey the law if they expect many others to do so.

Keywords: Deterrent Effect of Legal Sanctions, Expressive Law, Social Norms, Public Goods, Voting

JEL Classifications: H41, D72, K42, H26, C92

Working Paper Series