Behavioral and Social Mechanisms that Undermine Legality in the Workplace: Examining the Efficacy of Trade-Secrets Laws Among Knowledge Workers in Silicon Valley

Abstract

The paper seeks to advance the state of norms scholarship with regards to the behavioral limits of formal and informal controls in the workplace. After describing and analyzing the status of trade secrets enforcement in Silicon Valley, the paper takes a three-tiered approach to the normative failures in the formal and informal enforcement of trade secrets laws. In the first tier, the author considers the limits of formal enforcement of trade secrets, focusing on the effect of the extensiveness and ambiguity of trade secrets and its limited deterrence and legitimacy. Lacking clear guidance from the law, the paper suggests that industry norms might replace the law. Nonetheless, in the second tier, the author demonstrates the limits of informal enforcement, examining the failures that could arise from conflicting messages communicated by the information-accepting and information-producing firms as well as from the dependency of fairness on the prevailing practice. In the third tier, the focus is on merging the bounded rationality line of research with the social norms scholarship. The paper demonstrates the potential failures that could emerge from biased estimation of the prevalence of information-sharing norms.

Keywords: social norms, employment law, trade secrets, behavioral economics, silicon valley , experimental sruveys , law and psychology, IP