How laws effect behavior

Introduction

  • Laws and formal rules are defined as ‘obligations backed by incentives.’

  • The impact of formal rules on cooperative behavior is explored using public good games.

  • Key questions include:

    • How do obligations affect cooperative behavior?

    • How do non-binding incentives affect cooperative behavior?

    • How do obligations and non-binding incentives interact?

    • What channels affect behavior?

Key Concepts

Obligations and Incentives

  • Obligations: Define the expected behavior that individuals should maintain.

  • Incentives: Relate to the consequences of meeting or violating obligations.

  • Both are crucial for understanding compliance with laws.

Experimental Design

  • Conducted a series of experiments focusing on public goods games.

  • Varied intensity of incentives and level of obligations independently.

  • Introduced obligations in the form of minimum contributions, while incentives were provided as probabilistic rewards or punishments.

  • Focus on how each treatment impacts cooperation among participants.

Findings

Impact of Obligations

  • Obligations Alone: Introduction of obligations significantly increases contributions.

  • Without incentives, obligations raised contributions by 41% compared to no obligations.

  • Higher obligations (16 tokens) led to higher average contributions compared to lower or no obligations.

  • Contributions increased from 8.02 (no obligations) to 11.33 (high obligations).

Non-Binding Incentives

  • Incentives Alone: No significant effect on contributions when introduced without obligations.

  • Non-binding incentives did not sufficiently promote cooperation in isolation.

  • Even very low incentives combined with obligations resulted in increased cooperation; for example, contributions rose in the presence of minimal incentives.

Interaction Between Obligations and Incentives

  • Complementarity: Obligations and incentives are not mutually exclusive; they work together to enhance cooperation.

  • The combination of high obligations with any form of incentive led to even better outcomes, indicating that incentives can reinforce the effect of obligations.

  • Example: Average contributions in high obligation treatments with low incentives were still higher than without obligations.

Behavioral Channels

Beliefs and Cooperation

  • Obligations shaped individuals' beliefs about others' contributions, often leading to increased cooperation due to expectations of joint contributions.

  • Two significant channels affecting behavior were identified:

    • Beliefs about Others: Beliefs about the behavior of peers influenced willingness to contribute.

    • Self-Expectations: Awareness of obligations increased personal motivations to comply.

Conditional Contributions

  • Conditional contributions to public goods were analyzed in various treatments, highlighting that higher obligations led to greater contributions irrespective of low incentive levels.

  • The relationship between obligations and contributions indicated that compliance with norms affects individual behaviors significantly.

Conclusion

  • The analysis supports the idea that laws and formal rules hold expressive power, affecting behavior beyond mere material payoffs.

  • Obligations play a crucial role in driving compliance, while non-binding incentives help to sustain and enhance cooperative behavior.

  • Understanding these dynamics is essential for formulating effective public policies and improving social cooperation.