Behind the Veil of Legal Uncertainty
42 Pages Posted: 2 Jul 2010 Last revised: 26 Dec 2015
Date Written: July 1, 2010
This paper demonstrates the positive role that ambiguity may play in various legal contexts, based on two complementary perspectives: jurisprudential and behavioral. The jurisprudential perspective identifies contexts and circumstances where creating a "veil of ignorance," which masks people’s awareness and knowledge of the ex post legal consequences of their acts, may be desirable. The behavioral perspective suggests that uncertainty in law, especially with regard to the likelihood of receiving legal benefits following a certain action, may reduce the likelihood that people will rely on those benefits when they take this action and increase the 'authenticity' of their behavior. This perspective is based on both a theoretical review of the literature on uncertainty as well on an experimental survey conducted in the context of employment law. The findings of the experimental study show that both ambiguous and probabilistic legal benefits are less likely to distort people’s original preference for a given legal arrangement.
This paper develops a theoretical taxonomy that outlines three types of areas in the law where placing a veil of legal uncertainty or "masking" its full content is most justified. The first type occurs when people are offered solutions to a certain situation ex post but wish to prevent a situation of "moral hazard" where relief is given to people who choose to be in that situation ex ante. Masking the ex post relief in such circumstances may prevent inefficient actions by individuals who would rely ex ante on ex post legal consequences. The second type deals with situations where the desirability of a certain course of action taken by an individual may be achieved only when done genuinely, namely when legal consequences are not the main factor of concern. Masking the ex post legal consequences ensure the genuineness of people's decisions in such a circumstance. In the third type that focuses on pro-social activities, a desired course of action obviously exists. However, In light of the relatively well-known concern of theoretical paradigms as "crowding-out," reduction in 'image motivation', and commodification, we argue that if people’s motivations will not be driven by legal benefits, the value to both self and society from their behavior will increase. Thus, the argument in favor of masking the law in the third type focuses on the identity-related value that could emerge from decreasing people’s awareness of the legal benefits they may gain from engaging in socially-desirable activities.
While advocating the benefits of masking the law, this article recognizes that there may be some disadvantages that arise due to legal uncertainty, even in the three situations described above where masking the law may be desirable. First, there is the fear of excessive litigation. Second, we discuss various types of distributive problems that may arise given an inequality in the effect of uncertainty on different parties. Finally, this paper demonstrates the potential value of the "veil of uncertainty" as well as its application to various areas of law such as bankruptcy law, marriage law, labor relationships, tax law, and surrogacy contracts. The conclusion of this paper demonstrates that, properly used, uncertainty can dramatically enhance the efficiency and fairness of those areas of law and prevent the undesirable phenomena of excessive commodification of personal relationships and crowding-out.
Keywords: Ambiguity, Uncertainty, Jurisprudence, Acoustic Separation, Authenticity, Standards, Rules
JEL Classification: K20, K31
Suggested Citation: Suggested Citation