Meeting by Signals, Playing by Norms: Complementary Accounts of Non-Legal Cooperation in Institutions

Posted: 19 Jun 2002

See all articles by Edward B. Rock

Edward B. Rock

New York University School of Law; European Corporate Governance Institute

Michael L. Wachter

University of Pennsylvania Law School - Institute for Law and Economics

Abstract

This Essay on Eric Posner's "Law and Social Norms" examines the extent to which signaling theory can provide a model for understanding non-legally enforced cooperation within institutions. After reviewing the signaling model upon which Posner's book is based, we take the employment relationship in firms as a case study. We argue that while signaling theory may be useful in explaining the formation of that relationship, it does not provide a basis for understanding its observed regularities, or of the very limited role played by the legal rules in rendering the relationship "incentive compatible." We conclude that our analysis and Posner's focus on different aspects of similar phenomena and are complementary rather than competing theories.

JEL Classification: J2, M14, Z13

Suggested Citation

Rock, Edward B. and Wachter, Michael L., Meeting by Signals, Playing by Norms: Complementary Accounts of Non-Legal Cooperation in Institutions. University of Richmond Law Review, Vol. 36, No. 423, 2002 (Symposium on Eric Posner's "Law and Social Norms"). Available at SSRN: https://ssrn.com/abstract=314959

Edward B. Rock

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Michael L. Wachter (Contact Author)

University of Pennsylvania Law School - Institute for Law and Economics ( email )

3501 Sansom Street
Philadelphia, PA 19104
United States
215-898-7852 (Phone)
215-573-2025 (Fax)

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