Laws and Norms

Roland Bénabou and Jean Tirole
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Roland Bénabou: Princeton University
Jean Tirole: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: This paper analyzes how private decisions and public policies are shaped by personal and societal preferences (ìvaluesî), material or other explicit incentives (ìlawsî) and social sanctions or rewards (ìnormsî). It Örst examines how honor, stigma and social norms arise from individualsíbehaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modiÖed versions of Pigou and Ramsey taxation. Incorporating agentsíimperfect knowledge of the distribution of preferences opens up to analysis several new questions. The Örst is social psychologistsí practice of ìnorms-based interventionsî, namely campaigns and messages that seek to alter peopleís perceptions of what constitutes ìnormalî behavior or values among their peers. The model makes clear how such interventions operate, but also how their e§ectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conáict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reáect their knowledge of societal preferences, and these same ìcommunity standardsî are also what shapes social judgements and moral sentiments. Setting law thus means both imposing material incentives and sending a message about societyís values, and hence about the norms that di§erent behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as ìcruel and unusual punishmentsî, irrespective of e§ectiveness considerations, in order to express their being ìcivilizedî.

Keywords: Motivation; Expressive content; Norms-based interventions; Punishments; Law; Taxation; Culture; Social norms; Stigma; Honor; Reputation; Esteem; Incentives (search for similar items in EconPapers)
Date: 2025-10-07
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