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Expressive Law: Framing or Equilibrium Selection?

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  • Law
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  • Economics

Abstract

Expressive Law: Framing or Equilibrium Selection? Berkeley Law From the SelectedWorks of Robert Cooter March 2001 Expressive Law: Framing or Equilibrium Selection? Contact Author Start Your Own SelectedWorks Notify Me of New Work Available at: http://works.bepress.com/robert_cooter/70 1 Expressive Law: Framing or Equilibrium Selection? Iris Bohnet* and Robert D. Cooter** Abstract Besides creating fear of sanctions, laws sometimes express collective commitments that can affect people’s behavior in at least two ways. First, a law can frame an act as wrong and elicit intrinsic motivation to avoid doing it. Second, when people benefit from doing the same thing as others, a law can cause people to conform to it because they believe that others will do so. We investigate framing and coordination effects experimentally in three games: a prisoner’s dilemma, a crowding game, and a coordination game. We simulate a law by telling subjects that one choice will result in a probabilistic penalty. In the prisoner’s dilemma and the crowding game, announcing the penalty had no effect. In the coordination game, announcing the penalty caused behavior to jump to the Pareto-superior equilibrium. Our results suggest that law’s largest effects come from equilibrium selection and not from preference change. Keywords: Equilibrium selection, framing, expressive law, experimental law and economics, coordination, prisoner's dilemma. JEL codes C72, C91, K42 * Kennedy School of Government, Harvard University, 79 JFK Street, Cambridge, MA02138, email: [email protected] ** Boalt Law School, University of California at Berkeley, Berkeley, CA94720, email: [email protected] 2 INTRODUCTION Making a law, conventionally defined as an obligation backed by a sanction, can affect behavior in at least three ways. First, fear of sanctions deters some people from breaking the law. The theory of d

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