 Trust, Treason, and Trials: An Example of How the Evolution of Preferences Can Be Driven by Legal InstitutionsThe Journal of Law, Economics, and Organization, 1998, vol. 14, issue 1, 44-60 Abstract: This study tries to enlarge the scope of law and economics by providing an example that legal institutions do not only have short-run effects on present behavior by changing the cost-benefit relation of different actions but can also drive the evolution of preferences. Therefore legal design has long-run effects on behavior which should not by neglected by legislators. The study presents a simple model of cooperation where only one party has the option to observe the outcome of joint efforts. While this party can pretend a failure of cooperation, the other party has the option to monitor its partner. The model considers resource variables and a psychological variable reflecting remorse in case of betrayal. Players are assumed to behave rationally according to given preferences, but preferences may change in the course of evolution. The results show that a "good" design of legal institutions can crowd out "bad" preferences. Copyright 1998 by Oxford University Press. Date: 1998 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:14:y:1998:i:1:p:44-60 Ordering information: This journal article can be ordered from Access Statistics for this article The Journal of Law, Economics, and Organization is currently edited by Andrea Prat More articles in The Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. |
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