A Model of Time-Inconsistent Misconduct: The Case of Lawyer Misconduct
35 Pages Posted: 28 Nov 2005 Last revised: 13 Oct 2008
This article develops a model of time-inconsistent misconduct to explain incremental misconduct by lawyers - i.e., repeated, marginal misconduct that over time can lead to a moral unraveling or disintegration. A person engages in time-inconsistent misconduct when: (1) she has determined that a particular type of misconduct has negative expected returns and made a long-term decision to abstain from such misconduct; (2) nonetheless, when provided with the opportunity, she reverses her long-term preference to abstain and engages in misconduct; and (3) the reversal is due to a preference for immediate gratification (and not to the acquisition of new information). A person will engage in such misconduct in each period in which the incremental gain from misconduct (i.e., the added incremental utility due to the immediacy of a reward or from avoiding an immediate cost) exceeds the incremental loss (i.e., the actual net expected loss from that one act of misconduct). For example, the prospect of receiving an immediate reward can lead a lawyer to repeatedly take prohibited or unethical actions, a phenomenon that I refer to as nibbling opportunism. At the same time, the prospect of incurring an immediate cost can lead a lawyer to repeatedly procrastinate following through with a required action. Time-inconsistent misconduct harms both the third-party victims and the lawyer - i.e., each time that the lawyer engages in misconduct she incurs an incremental loss that from a long-term perspective she wanted to avoid, and which in the aggregate can be very large. Accounting for time-inconsistent misconduct is important, among other reasons, because the rules needed to deter such misconduct are different from those needed to deter the time-consistent misconduct assumed in standard models. The time-inconsistent misconduct model also generalizes to other types of misconduct, such as criminal misconduct and group misconduct.
Keywords: legal ethics, behavioral law and economics, time-inconsistent preferences, hyperbolic discounting, criminal law, group misconduct
JEL Classification: D99, K42, D61
Suggested Citation: Suggested Citation