On the Complementarity between Law and Social Norm: A Model Analysis with Special Reference to the Liability Rule for Tort

Osaka University - Institute of Social and Economic Research Discussion Paper No. 765

18 Pages Posted: 18 Jan 2010

See all articles by Atsushi Tsuneki

Atsushi Tsuneki

Osaka University - Institute of Social and Economic Research (ISER)

Yoshinobu Zasu

Waseda University - Waseda Institute for Advanced Study

Date Written: January 6, 2010

Abstract

How the law and the social norm interact with each other in the legalized modern society, whether the law completely replaces the pre-existing social norm or they coexist, and whether their interaction achieves an efficient system of social rules or there is innate inefficiency, have remained obscure until today. This article provides an analytical model to clarify the interrelationship between the law and the social norm. We show that, where both the law and social norm maximize social welfare, their non-cooperative interaction attains Pareto efficiency and that they are perfect substitutes to each other. We then consider the case where social norm is determined on the basis of some misperceptions and show the possibility that an inefficient social system may persist. Furthermore, we illustrate the possibility that law and social norm are complements to each other and that the existence of the government could be second-best.

Keywords: social norm, strict liability, wealth maximization, Nash equilibrium

JEL Classification: K00, K13

Suggested Citation

Tsuneki, Atsushi and Zasu, Yoshinobu, On the Complementarity between Law and Social Norm: A Model Analysis with Special Reference to the Liability Rule for Tort (January 6, 2010). Osaka University - Institute of Social and Economic Research Discussion Paper No. 765 , Available at SSRN: https://ssrn.com/abstract=1532509 or http://dx.doi.org/10.2139/ssrn.1532509

Atsushi Tsuneki (Contact Author)

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Yoshinobu Zasu

Waseda University - Waseda Institute for Advanced Study ( email )

Shinjyuku, Tokyo 169-0051
Japan

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