Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162483
Authors: 
Hoeppner, Sven
Lyhs, Laura
Year of Publication: 
2016
Series/Report no.: 
Jena Economic Research Papers 2016-010
Abstract: 
Doctrinal lawyers strive to reduce legal uncertainty based on the premise that difficult to predict legal consequences discourage socially desirable activities. Contributions from the economic theory of law suggest that increasing legal uncertainty can be socially beneficial. We test in an innovative laboratory experiment whether increasing the variability of an exogenous choice threshold (legal standard) increases or reduces socially desirable behavior. The results indicate a U-shaped relationship between increases in variability and activity choices: increases in variability first induce lower than optimal choices under an efficient standard (overcompliance), but eventually lead to greater than optimal choices under an efficient standard (undercompliance). We also find that overcompliance arises only under low degrees of standard variability. Moreover, increasing variability gradually crowds-out compliant choices. Finally, in the experiment minimal variability of the legal standard induces erratic individual behavior beyond socially satisfactory levels such that the standard loses its coordination function.
Subjects: 
legal uncertainty
vague legal standard
overcompliance and undercompliance
experimental law and economics
compliance crowding-out
JEL: 
C91
D02
K10
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.