How Laws Affect Behavior: Obligations, Incentives and Cooperative Behavior

36 Pages Posted: 25 May 2010

See all articles by Pietro Vertova

Pietro Vertova

Bocconi University

Roberto Galbiati

Department of Economics, Sciences Po-CNRS

Date Written: May 25, 2010

Abstract

Laws and other formal rules are ‘obligations backed by incentives’. In this paper we explore how formal rules affect cooperative behaviour. Our analysis is based on a series of modified experimental public good games designed to isolate the impact of exogenously requested minimum contributions (obligations) from those of marginal incentives backing them. We find that obligations have a sizeable effect on cooperative behaviour even in absence of incentives. When non-binding incentives are introduced, requested contributions strongly sustain cooperation. Therefore, in contrast with cases in which incentives crowdout cooperative behaviour, in our experiments obligations and incentives are complements, jointly supporting high levels of contributions. Moreover, we find that variations in obligations affect behaviour even when incentives are held constant. Finally, we explore the behavioural channels of the previous results, finding that both people’s beliefs about others’ contributions and willingness to cooperate are called into play.

Suggested Citation

Vertova, Pietro and Galbiati, Roberto, How Laws Affect Behavior: Obligations, Incentives and Cooperative Behavior (May 25, 2010). Available at SSRN: https://ssrn.com/abstract=1615349 or http://dx.doi.org/10.2139/ssrn.1615349

Pietro Vertova

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Roberto Galbiati (Contact Author)

Department of Economics, Sciences Po-CNRS ( email )

28 rue des saints peres
Paris, 75007
France

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