Coordinating in the Shadow of the Law: Two Contextualized Tests of the Focal Point Theory of Legal Compliance

59 Pages Posted: 24 Sep 2007 Last revised: 1 Apr 2009

Date Written: May 5, 2008

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.

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

JEL Classification: C78, K00, K19

Suggested Citation

McAdams, Richard H. and Nadler, Janice, Coordinating in the Shadow of the Law: Two Contextualized Tests of the Focal Point Theory of Legal Compliance (May 5, 2008). Law & Society Review, forthcoming 42; Law & Society Review, Vol. 42, pp. 865-898, 2008; U of Chicago Law & Economics, Olin Working Paper No. 406; U of Chicago, Public Law Working Paper No. 184; Northwestern Law & Econ Research Paper No. 08-04. Available at SSRN: https://ssrn.com/abstract=1016488

Richard H. McAdams

University of Chicago Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-834-2520 (Phone)

Janice Nadler (Contact Author)

Northwestern University - School of Law

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-3228 (Phone)
312-503-2035 (Fax)

American Bar Foundation ( email )

750 N. Lake Shore Drive
Chicago, IL 60611

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