Laws and Norms: Experimental Evidence with Liability Rules 

Laws and Norms: Experimental Evidence with Liability Rules 


Seminar by Romain Espinosa (Université Paris 2)

On Friday, December 16, 2016 at 12:30 am (Séminaire 6 - B31) 

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Subjects facing varying circumstances choose between actions which provide private benefits but may impose losses on strangers. We compare legal environments (no law, strict liability and an efficiently designed negligence rule) when liability rules are either perfectly enforced (Strong Law) or only weakly so (non-deterrent Mild Law). Under Strong Law, for circumstances where self and group interest conflict, strict liability and the negligence rule efficiently regulate behavior and do much better than no law; for circumstances without conflict, no law and the negligence rule are equally efficient but strict liability does less well because it over-deters. Under nondeterrent Mild Law, for circumstances with conflict, both liability rules still regulate behavior better than no law but strict liability does better than the negligence rule; for circumstances without conflict, strict liability again over-deters while no law and the negligence rule are equally efficient. We investigate how legal sanctions and social preferences interact to yield this pattern.

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