Laws and Norms with (Un)Observable Actions

46 Pages Posted: 24 Aug 2020 Last revised: 26 Aug 2020

See all articles by Claude Fluet

Claude Fluet

Université Laval

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty

Date Written: August 24, 2020

Abstract

We analyze the interactions between social norms, the prevalence of regulated acts, and policies. These interactions are impacted by people's inability to directly observe actors' behavior. Norms are ineffective incentivizers when acts are committed either very frequently or very infrequently, because noisy signals of behavior are then too weak to alter people's beliefs about others' behavior. This cuts against the dynamics of the `honor-stigma' model (Bénabou and Tirole 2006, 2011) and reverses its implications with even moderately noisy signals. With unobservable acts, the review process through which incentives are provided becomes an additional policy variable whose optima we characterize.

Keywords: Norms, social concerns, reputation, esteem, stigma, signaling, regulation

JEL Classification: D62, D64, D82, H41, K10, K4, K42, Z13

Suggested Citation

Fluet, Claude-Denys and Mungan, Murat C., Laws and Norms with (Un)Observable Actions (August 24, 2020). George Mason Law & Economics Research Paper No. 20-25, Available at SSRN: https://ssrn.com/abstract=3680063 or http://dx.doi.org/10.2139/ssrn.3680063

Claude-Denys Fluet

Université Laval ( email )

2214 Pavillon J-A. DeSeve
Quebec, Quebec G1K 7P4
Canada
1-418-656-2131, ext 3290 (Phone)

Murat C. Mungan (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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