U. of Paris Ouest Nanterre la Défense
(Friday, 25th May 2007)
Title : Legal Versus Normative Incentives
The presentation analyzes the complementarity between legal incentives (the threat of being held liable for damages) and normative incentives (the fear of social disapproval or stigma) in situations where instances of misbehavior are not perfectly observable. There may be multiple equilibria within a given legal regime, as well as multiple socio-legal equilibria. In particular, there are high stigma-high evidentiary standard regimes versus low stigma-low stan- dard ones. This may explain some of the diferences between common law and civil law regarding the notions of fault or negligence. The analysis may provide an explanation for trends currently observed in civil law systems, in particular the weakening of evidentiary requirements in tort cases.