What Makes Law to Change Behavior? An Experimental Study

RUSTAM ROMANIUC
REVIEW OF LAW & ECONOMICS (2016). ADVANCED ONLINE PUBLICATION DOI: 10.1515/rle-2015-0045.

Abstract: The use of mild laws to affect people’s behavior is pervasive – from environmental regulation to tort law – but little is known about how the law changes human behavior and social outcomes when it uses non-deterrent monetary incentives. We find that when low monetary incentives are framed so as to indicate what is group desirable behavior, people behave more cooperatively in a public goods game than when no-incentives exist. However, we find that the effect is transitory. Surprisingly, the effect is long lasting when low monetary incentives are presented as payments for some neutral behavior – that is, when the fine is presented as a mere price change. Our findings suggest that the indication of what is group desirable behavior makes salient the conflict between people’s normative expectations and what others effectively do. This undermines conditional cooperators’ own motivation to contribute to public goods. Neutrally framed price-incentives have a long lasting positive effect on contribution decisions because it does not indicate what one should do and thus avoids the conflict with what others effectively do.