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Law and economics scholarship suggests that, in appropriate cases, the law can improve people’s behavior by changing their preferences. For example, the law can curb discriminatory hiring practices by providing employers with information that might change their discriminatory preference. Supposedly, if employers no longer prefer one class of employees to another, they will simply stop discriminating, with no need for further legal intervention. The current Article aims to add some depth to this familiar analysis by introducing the insights of behavioral ethics into the law and economics literature on preference change. Behavioral ethics research shows that wrongdoing often originates from semi-deliberative or non-deliberative cognitive processes. These findings suggest that the process of preference change through the use of the law is markedly more complicated and nuanced than previously appreciated. For instance, even if an employer’s explicit discriminatory stance is changed, and the employer no longer consciously prefers one class of employees over another, discriminatory behavior might persist if it originates from semi-conscious, habitual, or non-deliberative decision-making mechanisms. Therefore, actual change in behavior might necessitate a close engagement with people’s level of moral awareness. We discuss the institutional and normative implications of these insights and evaluate their significance for the attempt to improve preferences through the different functions of the legal system.

Times of emergency often serve as triggers for the creation of new policy. Such policies may involve restriction of human rights, and various mechanisms can be used to mitigate the severity of such restrictions. One such mechanism is the temporary measure. A series of three experiments examined the potential of temporary measures for increasing the likelihood of approval of rights-restricting policy and the role of time – both prospectively and retrospectively – in the willingness to restrict human rights. We find that behavioural examination confirms the concerns expressed in the literature regarding temporary legislation. Participants asked to approve a rights-restricting policy were more willing to approve a temporary measure when it was presented as a compromise, and they were more willing to extend a rights-restricting policy when it had previously been implemented. These findings indicate a possible slippery slope effect in temporary legislation: policymakers might be persuaded to approve measures they would not otherwise approve when those measures are temporary or when they have been previously approved by others.

Most companies use codes of conduct, ethics training, and regular communication to ensure that employees know about rules to follow to avoid misconduct. In the present research, we focused on the type of language used in codes of conduct and showed that impersonal language (e.g., “employees” or “members”) and personal, communal language (e.g., “we”) lead to different behaviors because they change how people perceive the group or organization of which they are a part. Using multiple methods, including lab- and field-based experiments (total N = 1,443), and a large data set of S&P 500 firms (i.e., publicly traded, large U.S. companies that are part of the S&P 500 stock market index), we robustly demonstrated that personal, communal language (compared with impersonal language) influences perceptions of a group’s warmth, which, in turn, increases levels of dishonesty among its members.

A common dilemma in regulation is determining how much trust authorities can place in people’s self-reports, especially in regulatory contexts where the incentive to cheat is very high. In such contexts, regulators, who are typically risk averse, do not readily confer trust, resulting worldwide in excessive requirements when applying for permits, licenses, and the like. Studies in behavioral ethics have suggested that asking people to ex-ante pledge to behave ethically can reduce their level of dishonesty and noncompliance. However, pledges might also backfire by allowing more people to cheat with no real sanctions. Additionally, pledges’ effects have only been studied in one-shot decision making, and they may only have a short-term effect that could decay in the long run, leading to an overall erosion of trust. We explored the interaction of pledges with sanctions and the decay of their effects on people’s honesty by manipulating whether pledges were accompanied by sanctions (fines) and testing their impact on sequential, repeated ethical decisions. We found that pledges considerably and consistently reduced dishonesty, and this effect was not crowded out by the presence of fines. Furthermore, pledges seem to exert an effect on most people, including those who are relatively less inclined to follow rules and norms. We conclude that pledges could be an effective tool for the behavioral regulation of dishonesty, reduce the regulatory burden, and build a more trusting relationship between government and the public, even in areas where incentives and opportunities to cheat are high.

Illegal and unethical conduct often proliferates around ethical blind spots—scenarios and situations in which ordinary law-abiding people find it difficult to identify the harmfulness of their own actions. Ideally, regulators should act to diffuse ethical blind spots by trying to improve ethical awareness of potential perpetrators, in order to reduce wrongdoing. In practice, however, regulators might have a distorted incentive to conserve ethical blind spots rather than diffuse them. Regulators seek to bolster their perceived effectiveness by demonstrating intensive and rapid enforcement activity. To do so, regulators might prefer to ignore the underlying cognitive causes of unethicality, and instead constantly sanction those wrongdoers who repeatedly fall into the same trap of unintentional wrongdoing. We explore the origins of this problem in common regulatory incentive structures and in the standard design of legal norms.

Western societies are increasingly enacting majority nationalism laws, intended to strengthen majority culture. We propose that majority nationalism laws alter public attitudes about the equal protection of minorities and that their impact varies between majorities and minorities. To explore this issue, we examine the impact of Israel’s recently enacted Nation Law on both the Jewish Majority and Arab minority. Experimental evidence from before the law’s passage reveals that, when the Nation Law is presented as likely to pass, both minority and majority respondents perceive the law as permitting minority discrimination in housing, voting rights, and the labor market. Yet panel and cross-sectional data show that only minority respondents changed their perceptions after enactment of the Nation Law: they came to believe that its passage eroded their legal status. These findings expose the troubling political effects of majority nationalism laws, particularly on minorities, and highlight the law’s heterogenous expressive effects.

Law and economics scholarship suggests that, in appropriate cases, the law can improve people’s behavior by changing their preferences. For instance, the law can curb discriminatory hiring practices by providing employers with information that might change their preferences towards discriminatory hiring. Supposedly, if employers no longer prefer one class of employees to another, they will simply stop discriminating, with no need for further legal intervention. The current paper adds some depth to this familiar analysis by introducing the insights of behavioral ethics into the law and economics literature on preference change. Behavioral ethics research shows that wrongdoing often originates with semi-deliberative or non-deliberative cognitive processes. These findings suggest that the process of preference change, through the use of the law, is markedly more complicated and nuanced than previously appreciated. Thus, for instance, even if an employer’s explicit discriminatory stance is changed, and the employer no longer consciously prefers one class of employees over another, discriminatory behavior might still surface if it originates with semi-conscious, habitual, or non-deliberative decision-making mechanisms. Therefore, actual change in behavior might necessitate a close engagement with people’s level of moral awareness. We discuss the institutional and normative implications of these insights and evaluate their significance for the attempt to improve preferences through the different functions of the legal system.

This article offers a novel analysis of the field of corporate governance by viewing it through the lens of behavioral ethics. It calls for both shifting the focus of corporate governance to a new set of loci of potential corporate wrongdoing and adding new tools to the corporate governance arsenal. The behavioral ethics scholarship emphasizes the large share of wrongdoing generated by "good people" whose intention is to act ethically. Their wrongdoing stems from "bounded ethicality" -- various cognitive and motivational processes that lead to biased decisions that seem legitimate. In the legal domain, corporate law provides the most fertile ground for the application of behavioral ethics since it encapsulates many of the features that the behavioral ethics literature found to confound the ethical judgment of good people, such as agency, group decisions, victim remoteness, vague directives and subtle conflict of interests. Bounded ethicality suggests a view of corporate law that is dramatically different than that portrayed by traditional legal and economic theorists. Not only does it suggest that wrongdoing can be committed by well-intentioned people who wish to do right, but also that the biases they display call for a radically different set of legal interventions than those advocated by standard economic theory. If standard theorizing views corporate agents as self-interest maximizers, bounded rationality perceives them as actors with varied and nuanced motivations that could benefit from subtle legal reforms. This Article's assessment of corporate governance through the behavioral ethical lens proceeds in three stages. First, it exposes potential wrongdoing by good people that conventional corporate governance does not address. Second, it suggests novel corporate governance interventions supported by behavioral ethics to address wrongdoing by good people. Third, it identifies existing interventions that according to behavioral ethics analysis may generate unintended adverse effects on the behavior of well-meaning corporate officers and exacerbate wrongdoing instead of mitigating it. As we will show bounded ethicality has important implications for a wide range of topics in corporate governance, such as board structure, independent directors, regulation of institutional investors and proxy advisory firms, the business judgment rule, and corporate and intra-board liability.

Growing recognition in both the psychological and management literature of the concept of “good people” has caused a paradigm shift in our understanding of wrongful behavior: Wrongdoings that were previously assumed to be based on conscious choice—that is, deliberate decisions—are often the product of intuitive processes that prevent people from recognizing the wrongfulness of their behavior. Several leading scholars have dubbed this process as an ethical “blind spot.” This study explores the main implications of the good people paradigm on the regulation of employees’ conflicts of interest. In two experiments, we examined the efficacy of traditional deterrence- and morality-based interventions in encouraging people to maintain their professional integrity and objectivity at the cost of their own self-interest. Results demonstrate that while the manipulated conflict was likely to “corrupt” people under intuitive/automatic mindset (Experiment 1), explicit/deliberative mechanisms (both deterrence- and morality-based) had a much larger constraining effect overall on participants’ judgment than did implicit measures, with no differences between deterrence and morality (Experiment 2). The findings demonstrate how little is needed to compromise the employees’ ethical integrity, but they also suggest that a modest explicit/deliberative intervention can easily prevent much of the wrongdoing that may otherwise result.

Experts in many domains, from education and finances to sports and entertainment, make multiple similar but independent decisions in sequence. Does the mere serial position of a case in a sequence influence the decision? We focus on the legal domain in which many high-stakes decisions are made in a sequence and justice considerations imply irrelevant factors like serial position of a case must not impact decision making. We identify four mechanisms that can drive serial position effects and note each can have different predictions, hence existence and direction of such effects are empirical questions. Indeed, most empirical evidence from non-legal settings suggests decisions become more favorable with serial position, but a previous study of sequences of parole hearings finds the opposite effect. We analyze two field datasets, 386,109 US immigration judges’ decisions on asylum requests and 20,796 jury decisions in 18th century London criminal court, and find decisions become more favorable (lenient) the later a decision is made in a sequence of decisions. To complement the analysis, we run three controlled experiments with laypeople and find similar results. We conclude that while serial position effects may be context-specific, from the point of view of the individual involved, it is often best to be last.

Behaviorally informed policies of interventions in choice architecture are growingly used to nudge people towards socially desirable behaviors. While consumers are usually the target of those nudges, businesses often serve as “nudging agents" on behalf of government regulation, or may be the target of governmental nudges themselves. Businesses’ support of such behavioral policies might be critical for their implementation, but the perceptions of managers towards nudges has never been directly assessed. We distinguish between government-to-business (G2B) nudges vs. government-to-business-to-consumer (G2B2C) nudges and provide first evidence of business managers’ attitudes towards such interventions. We discover an overall high level of support for nudges, and in particular for G2B nudges, with variations between types of nudges, the domain that they operate in, and whether they benefit the business or the consumer.

Social enforcement of norms governing appropriate business practices, through online and social networks, is regarded as an effective alternative to formal, state‐sponsored enforcement. However, recent research finds that such norms are interpreted differently when applied to individual actors than when applied to corporations. This article finds that this difference transcends to enforcement, and that willingness to actively respond to a transgression depends on both the transgressor's identity and the type of violation. Three studies found that people are reluctant to substitute social enforcement for state‐sponsored action, and that the preference for formal over social action was generally more pronounced when the target of the action was an individual than when the action targeted a corporation. Furthermore, individuals were judged more severely for intentional harms, whereas corporations received higher levels of critique for violations caused by negligent behavior. Our findings suggest that the state may need to exercise caution in outsourcing norm enforcement in commercial relationships.

This paper seeks to explore whether the interpretation of legal standards is influenced by decision-makers’ substantive decision. Prior literature on motivated reasoning has shown that decision-makers “shift” their perception of evidence in their desired direction. To the extent this logic applies to legal-standards, we should expect decision-makers to adjust the perception of the legal standard accordingly — e.g., one’s decision to favor the plaintiff would induce a pro-plaintiff interpretation of the required threshold to win a case. We present the results of two experiments in which we asked subjects to report their interpretation of the applicable legal threshold after deciding a case, under different legal thresholds. Our participants, by and large, did not shift the legal standard to conform to their substantive decision, contrary to the theoretical expectations. We thus conclude that decision-makers treat the legal standard distinctly than regular evidence.

Wrongdoing is ubiquitous. Media outlets constantly report an endless stream of deleterious human behavior, from sexual harassment and fraud in financial markets to corporate and political corruption. Recent developments in behavioral ethics research suggest that these ills will forever accompany human interaction due to the phenomenon of “bounded ethicality,” or people’s limited ability to conduct an objective and candid moral examination of their own actions. When evaluating the ethical implications of their behavior, individuals have been shown to be biased and to systematically underestimate or ignore the magnitude and effect of their own misconduct. Such findings have troubling implications from a law enforcement perspective. That is, if wrongdoers are able to convince themselves they are doing nothing wrong, how can regulators and policy makers ever successfully reduce or prevent misconduct? Essentially, recognizing the power of bounded ethicality reinforces the idea that destructive human behavior may be unavoidable, and that it may never be possible to reduce the systematic wrongdoing currently observed throughout society. In response to the challenges that bounded ethicality poses, this Article explores how using big data analytics contributes to curbing both ethical bias and the results of bounded ethicality. The paper is breaking new ground in being the first to explore the intersections between the growing literature on behavioral ethics, highlighting the concept of bounded ethicality, and the scholarship and research on data-driven law enforcement. We suggest that to combat bounded ethicality, regulators should use ethical nudges, regulatory interventions designed to improve ethical deliberation by potential wrongdoers. We show that the use of big data analytics is crucial for the successful deployment of such regulatory interventions, for several reasons. First, ethical nudges must be deployed in real time, when potential perpetrators are making their decisions regarding possibly unethical actions. Big data analysis can facilitate this type of timely regulatory response in its shift from ex post inquiry to ex ante prediction. By collecting and analyzing data on the antecedents of wrongdoing, big data analytics can enable regulators to respond at opportune moments and situations, rather than engage perpetrators ex post facto. Second, ethical nudges must be targeted rather than general. If individuals are nudged constantly, ethical nudges will lose their effectiveness due to the phenomenon of ethical numbing. By identifying the situations that breed unethicality and limiting nudges to those situations, big data analysis can ensure that people are not overexposed to ethical nudges, thereby maintaining their efficacy. Third, ethical nudges must also be tailored to the characteristics of the specific bias that is causing unethical behavior in each specific case. Using big data analytic, together with behavioral ethics insights, regulators can collect information that will indicate the nature of the ethical bias operating in specific instances of wrongdoing, and thus be able to deploy the appropriate regulatory response. In addition to presenting several other advantages of using big data analytics as part of the efforts to reduce bounded ethicality, this paper suggests a full menu of regulatory tools designed to improve moral deliberation and discusses the importance of big data analytics as a basis for their use. Our analysis calls for a reorientation of existing practices of data-driven law enforcement, to make it more suited for the regulation of bounded ethicality. We show that this reorientation is also necessary for reasons related to the legitimacy of data-driven law enforcement. Data-driven law enforcement currently adopts a personalized focus, attempting to identify individuals who are more likely to commit crimes. This approach is highly problematic, raising privacy concerns and perpetuating discriminatory practices. Conversely, the approach we advocate calls for a focus on situations, not individuals, as behavioral ethics studies show that bounded ethicality is primarily situation driven. Therefore, big data analytics should be used to identify situations that breed unethicality, thus shifting the focus to individuals more likely to act badly. This use of big data analytics is less harmful to individuals’ privacy, as it does not focus on personalizing legal treatments.

The morality of killing in war, which has been the subject of debate among philosophers and legal scholars, focuses on two main approaches: the “traditional” and the “revisionist.” The traditional approach argues for symmetry: soldiers of both sides are liable to be killed, whether or not the war they fight is just; civilians are immune from being harmed whether or not they are responsible for the evil against which the just side fights. Recently this approach has been challenged by a revisionist viewpoint, which derives the morality of killing in war from facts concerning the responsibility of individuals for wrongful threats. Killing soldiers, who fight a just war, is morally impermissible, whereas in certain cases killing civilians who are involved in an unjust aggression is permissible. The present study uses an experimental survey to examine whether moral attitudes toward targeting individuals in war are shaped by the factors underlying this debate: the cause of the war, the status of the targeted individuals as soldiers or civilians, and their involvement in the war effort. Respondents comprised a representative sample of the Jewish population in Israel. Our findings reveal a complex interplay between the factors, demonstrating the relevance of each factor to moral judgments. Notably, participants did not consider decisions on the battlefield to be independent of the justification of the war, a result which is consistent with the revisionist approach. We discuss the potential consequences of our findings on the understanding of commonsense morality and on the law. We also suggest that concepts derived from the social-psychological literature concerning moral self-regulation may help explain some of our findings.

The paper highlights how our knowledge about the manner the human mind works and people behave in social interactions may contribute to our understanding of employment discrimination and provide effective ways to address it. It calls for a rigorous empirical study of the mechanisms generating different forms of discrimination against disadvantaged groups and the implications that follow for law and policy. The paper’s focus is theoretical, criticizing the current state of research on employment discrimination and calling for an integrative approach to the research in this area. In particular, the paper criticizes the lack of mutual communication among the various disciplines that study discrimination. Over-reliance on one type of methodology limits scholars’ ability to address nuances of most discriminatory settings. We criticize the “one policy fits all” approach, in which discrimination against all types of disadvantaged groups is viewed as capturing all types of discrimination as well as the lack of truly accounting for the interplay between deliberative and automatic modes of reasoning. The paper suggests that adopting an integrative perspective would raise awareness among policy-makers and employers to variations in the effects of social categories on hiring, promotion, and firing practices.

Western societies have experienced ethnic and religious diversification in recent decades. These demographic changes have been met by efforts to defend the local dominant culture using majority nationalism laws, intended to protect the cultural heritage of the majority. We empirically examine majority nationalism laws’ expressive effects on patterns of minority discrimination using the Israeli draft Nation Law (NL) as a case study. Drawing on two experimental surveys of a representative sample of the majority population of Israel (N = 602), our results lend weak support to the hypothesis that majority nationalism laws increase bias against minorities, and modest support to the hypothesis that such laws generate unintended spillover effects across different minority groups and from the public to the private sphere. Our main finding is that majority nationalism laws provoke a backlash reaction from those who oppose them. We define this as the provocative effect of law and discuss its relation to the expressive law theory. The results suggest that the effects of majority nationalism laws may vary systematically across ideological groups and spheres of discrimination.

Many scholars have pointed to the inequality in household responsibilities as the major source for the gender inequality and inferiority of women in the job market. Conventionally, affirmative action is perceived as a tool for addressing this problem. We argue that a general equilibrium analysis of these policies on both the job market and the division of work in the domestic sphere reveals how such policies can backfire, and worsen women’s status in the job market. We underscore in our model how the existence of two types of males — “cooperators” who assume equal responsibility for household work and “shirkers” who don’t — affects the outcome of the policies. Affirmative action may cause males to switch their type from cooperators to shirkers. If the switching effect is strong enough, it could net out the positive effect of affirmative action, leaving females with more housework and less time for investing in professional advancement. We suggest an alternative mechanisms for addressing the problem, primarily affirmative action for cooperating males, in order to incentivize male to equally share housework responsibilities.

Two insights of psychology on which we would like to draw are that people react to law in more complex ways than rational-choice models assume and that good people sometimes do bad things. With that starting point, this article provides a behavioral perspective on some of the factors that policymakers seeking to reduce the level of misconduct in the pharmaceutical industry should consider. Effective regulation and enforcement need to address the following questions: Who are the regulation's targeted actors - researchers or executives? Are the regulations directed toward research or marketing activities? Is the misconduct a product of explicit rational choice or implicit processes of which the actor is unaware? Is it reasonable to address all types of misconduct using the same approach? Certain misconduct - particularly by researchers - is due to automatic, intuitive, and unconscious decisions and needs to be addressed through different means than those used to address misconduct due to controlled, deliberate decisions. This article therefore recommends using different sorts of regulation depending on the context. It suggests more tailored enforcement mechanisms that will be sensitive to the pharmaceutical researchers' unique work motivations and to their awareness or lack of awareness of their own misconduct.

The focus of this book is on how governments may effectively use recent advances in the understanding of human behavior to guide their efforts to modify people’s behavior. To date, the insights of behavioral ethics that have completely revolutionized the business and management fields have yet to be applied in legal as well as governance research, especially in the context of legal enforcement. The growing recognition that misconduct can be facilitated by structural issues and is not just the product of a few “bad apples” has important implications for the design and fine-tuning of enforcement mechanisms. States need to modify their regulatory roles and functions based on the understanding that discrimination does not just stem from certain employers who hate minorities, that corruption is not just about greedy individuals, or that trade secrets are not just divulged for mercenary or revenge motives.This book argues that the good-people rationale—the idea that ordinary people could engage in all types of wrongdoing without being aware of the full meaning of their behavior—greatly complicates the regulatory challenge of states. Because of various psychological and social mechanisms that prevent people from recognizing their wrongdoing and encourage them to feel as if they are far more moral, unbiased, and law abiding than they actually are, individuals today are less likely to react to legal signals, which they view as directed to other, “bad” people. Similar self-serving mechanisms affecting their perception of social norms and fairness cause people to have very inaccurate views of the normative status of their behavior. Moreover, a great deal of uncertainty surrounds the good-people rationale. We do not yet know how “good” the good people are in terms of their awareness and ability to control their conduct. Nor can we quantify the ratio of good to bad people in society. Although we appreciate the need to address the misconduct of good and bad people differently, we do not know the costs of using the “wrong” intervention techniques to deal with various types of bad behavior. Bringing about the needed shifts in regulatory design first requires a shift in the behavioral analysis of law.

This paper examines how different legal instruments affect people's moral intuitions and willingness to engage in social enforcement in the field of environmental law. These instruments vary in terms of their governance technique, the process through which they were enacted, and their allocation of enforcement responsibilities. Their effect on citizens' moral evaluation and emotional reaction to corporate polluting behaviour are examined, based on an experimental survey of a representative sample of 1400 individuals in Israel. Our findings demonstrate that their design influences people's level of moral and emotional resentment when faced by environmentally problematic behaviour, as well as their motivation to engage in private enforcement. The design of the regulatory instrument could thus generate biases in social reactions to polluting behaviour, irrespective of its actual ecological adverse effect. We analyse the moral and psychological mechanisms which underlie these effects and explore their various policy implications.

In recent years, leading legal scholars have proposed many competing models for the expressive function of the law. This article attempts to organize and compare the competing models while examining a real-life dilemma—sharing confidential information when one moves from one company to another—and explores the mechanisms through which the law can affect people's behavior. The article examines the expressive impact that results when trade secret laws are experimentally “primed” on factors such as: intention to share confidential information, morality of sharing confidential information, perceived proportion of other employees who would share confidential information, and the likelihood of social approval by previous and current employers for sharing confidential information. Taking a path analysis approach, I discern which models (cost related, morality related, coordination based, or reflection of consensus) best explain the mechanism responsible for the expressive effect of legality. The comparison between the models illustrates the relative legal repercussions of price, consensus, and intrinsic motivation as they relate to employees' evaluations of the prevalence and desirability of trade secret sharing norms. Based on data collected from a sample of 260 high-tech employees in the Silicon Valley, the article demonstrates that—at least in the context of trade secret law—the expressive impact is based primarily on morality and less on the law's ability to impose social and career costs.

Social enforcement, the decentralized action by organizational actors of monitoring, identifying, and reporting legal violations, is widely recognized as a key factor in ensuring good governance. This article reports on an experimental survey conducted in the US and Israel examining the behavior of individuals when confronting workplace unlawful conduct. The study provides novel insights into the relationships between state based, organization based, and employee based enforcement. It finds that the likelihood and the manner of reporting will vary depending on the type of illegality and are strongly correlated to perceptions of legitimacy, job security, and voice within the workplace. Comparing illegalities, employees prefer to report clear violations by rank and file employees rather than violations by managers. At the same time, external reporting to government or media entities is most likely when violations involve the organization as a whole or implicate top management. The study also finds cultural and gender differences in reporting patterns. Finally, the study provides support for the understanding that social norms are more predictive of social enforcement than expected organizational costs.

In recent years, scholarly interest in unethical behavior in the workplace has been rapidly increasing. Recent research in this area has highlighted that unethical behavior is routinely committed b...

The present chapter attempts to map the literature of ethical decision making in psychology and management and examine the ways in which it could shape behavioral law and economics. In the last ten years, research in the field of ethical decision making has grown exponentially, mainly in the area of behavioral ethics or bounded ethicality. The new literature uncovers the various cognitive and motivational mechanisms that cause good people to engage in bad behaviors. This shift in focus has made ethical decision making an important area both normatively and descriptively for the scholarship on management. In the present chapter I make the case that as a result of the shift, this literature has become important to the law in general and to the domain of behavioral law and economics in particular. Moreover, I argue that to some extent this literature poses a much greater threat to the assumptions of rationality than does classical behavioral law and economics because it reexamines both the "self" in self-interest and the limited importance of "choices" in accounting for people's decisions and behaviors. In conducting this review, I examine all of the important paradigms and biases that have been developed in this area, such as moral disengagement, self-deception, moral licensing, automaticity of self-interest, moral hypocrisy, elastic justification, ethical fading, blind spots, and the dishonesty of honest people. I argue that although there has been a significant advance in the understanding of ethical decision making, our understanding is still not as developed as it seems, with numerous and at times conflicting paradigms attempting to describe how good people are responsible for bad deeds. I attempt to create some order on the descriptive side, explaining the principal taxonomies and highlighting their strengths and weaknesses. On the normative side, I show how the mechanisms developed by this literature uncover the limited ability of current enforcement strategies to shape behavior. The chapter concludes with some tentative suggestions on how to overcome these limitations and address the unaware, automatic unethical behaviors that are described by the bounded ethicality literature. In particular, I focus the legal feasibility of concepts such as dual reasoning enforcement, statistical unethicality, disambiguation, accountability and reflection.

The growing recognition of the notion of ‘good people’ suggests that many ethically relevant behaviors that were previously assumed to be choice-based, conscious, and deliberate decisions, are in many cases the product of automatic/intuitive processes that prevent people from recognizing the wrongfulness of their behaviour – an idea dubbed by several leading scholars as an ethical blind spot. With the rise of the focus on good people in psychology and management, the lack of discussion on the implications of this growing literature to law and regulation is quite puzzling. The main question, this study will attempt to explore is what are the implications of this literature to legal policy making. We examined, experimentally, using two m-Turk studies, the efficacy of deterrence- and morality-based interventions in preventing people who are in subtle conflict of interest from favoring their self-interest over their professional integrity and to behave objectively. Results demonstrate that while the manipulated conflict was likely to “corrupt” people under intuitive/automatic mind-set (Experiment 1), explicit/deliberative mechanisms (both deterrence- and morality-based) had a much larger constraining effect overall on participants’ judgment than did implicit measures, with no differences between deterrence and morality (Experiment 2). The findings demonstrate how little is needed to create a risk to the integrity of individuals, but they also suggest that a modest explicit/deliberative intervention can easily remedy much of the wrongdoing.

This chapter suggests that five distinctive assumptions of human motivation can be identified among the existing regulatory models. The first regulatory approach targets the incentive-driven individual. According to this model, the dominant motivation of the individual is based on a cost-benefit calculation and thus the approach of the regulator should focus on deterring the bad apples and providing incentives to the good apples. The second regulatory approach targets the reason-driven individual where the main assumption about human motivation is of an individual who looks to regulators to be convinced about the wisdom of engaging in a certain behavior. The third regulatory approach assumes that the dominant compliance motivation is related to social identity. Therefore, most of the attention is focused on demonstrating to the individual that the prevailing norm, either quantitatively or qualitatively, is to obey the law. The fourth regulatory approach, assumes that an individual is mainly motivated by fairness and morality. Finally, the fifth model, focuses on the citizenship-oriented individual, whose main motivation is compliance simply because it is the law, regardless of its content. The main theoretical body for this model is related to certain aspects of institutional legitimacy. Following a discussion of the differences and similarities among the different models, the main normative argument which is developed is related to the ability of the policy maker to take advantage of this knowledge to design a behaviorally-responsive regulation.

One of the leading theories for why employees join unions, represented in Freeman and Rogers’ influential book, "What Workers Want," is that employees' main concern is to be given a greater voice in the workplace and that unions best serve this function. This line of literature, while doing much to explore the functioning of unions, has overshadowed the voice associated with personal contracts in employees' everyday life. The current study analyses Israeli employees' preferences for voice through a comparison of their perception of collective agreements and unions in comparison to other available legal instruments and institutions, with special emphasis on personal contracts with their employers. The Israeli workforce is an especially interesting case study, due to the major changes undergone in Israel in the nature of employment relations. The data for this study was collected from a representative sample of 600 employees in Israel, using a combination of survey questions about their own work experience and scenario-based questions. Findings revealed an expected effect where stronger employees were more likely to trust personal contract rather than their unions for gaining a voice. Whereas workers with low levels of voice showed a stronger desire to join unions and manage their employment rights through collective agreements. In contrast to the current view in the literature on collective voice, our findings suggest, however, that gaining more of a voice did not predict the desire to stay unionized. Furthermore, the comparison between unionized and non-unionized employees, suggests that the latter group felt they had more influence on their employment conditions and were generally more satisfied with it. Unionized employees were far less involved and aware of their employment conditions and status. Furthermore, only among employees with personal contracts, was there a relationship between their influence, and their satisfaction from the legal instrument. Nonetheless, unionized employees were more likely to resist a change in the legal instrument that regulates their behavior. Hence, while a personal contract has the upper hand in providing a voice and a sense of control to employees; collective agreements are still desired, especially among weaker employees. The theoretical focus on voice as experienced on the individual level, leads to policy discussion about the choice of the optimal legal instrument for employees.

The influence of social norms on the willingness to obey legal norms depends on contingencies that have not been investigated. Theoretical, behavioral, and experimental considerations investigated in this paper establish the differential behavioral effects of legal rules and standards. The findings of experiments conducted by us indicate that in the absence of information concerning social norms, rules and standards have similar effects on compliance. In contrast, rules and standards have differential effects on compliance when they interact with social norms. Furthermore, it was found that social norms of noncompliance had a much greater effect than social norms of compliance. A second study demonstrated a similar relationship between self-interest and legal ambiguity, corroborating the theoretical mechanisms we have argued for, based on the findings of the first study. The implications of these findings to legal policy-making are discussed.

Law and economics scholars treat legal payments as fungible. To put things in the terminology often used by legal economists, legal payments are a price set for an activity. Just as a dollar paid for a tomato is identical to a dollar paid for a cucumber, so are a dollar paid as a pollution tax to the government and a dollar paid as compensation to the party injured by the pollution. Our goal in this study is to explore how different characteristics of legal payments affect the way in which people perceive them, and as a result the way they might behave. The three characteristics we focus on are: (a) the timing of the payment - we distinguish between payments that are made prior to committing the wrongful act and those made after the act has already been committed; (b) the identity of the party to which the payment is made - we distinguish between payments that function as compensation and are therefore paid to the injured party and those that are paid to a third party; and (c) whether or not the payment was probabilistic - we distinguish between payments that are certain and those that are not. We conjecture that social norms, cognitive biases, and other forces, could cause people to behave differently under legal rules that create similar economic consequences. Using a sample of 420 students, we employed a between-subject, three-factor design. Each factor was divided along two levels: timing of payment (ex-ante v. ex-post), identity of recipient (state vs. injured party), and the level of certainty (certain vs. probable). Participants were randomly divided amongst the six experimental conditions, and received a questionnaire with a hypothetical scenario that involved the behavior of an owner of a factory that creates a negative externality in its production process. Following the scenario, participants were asked about their likely behavior, as well as their social, legal and moral perceptions. Overall, we found that participants were more likely to produce when they paid the injured party, when they paid in advance and when the payment was not probabilistic.

In recent years, a growing number of leading legal scholars have attempted to explore the expressive function of the law. Unfortunately, since the vast majority of these papers do not employ empirical methods, it is difficult to assess whether the picture presented in this literature improves our overall understanding of a distinctive, expressive - social norms mediated - function of law, separate from the traditional functions of the law. The few empirical studies that have examined the expressive function of law have examined the effect of the law in abstract terms and in a laboratory context. In contrast, in this paper I take a real life dilemma - sharing confidential information when one moves from one company to another - and examine the mechanisms through which the law can affect people's behavior. Hence, in this paper I examine the expressive impact that results when trade secret laws are experimentally "primed" on factors such as: intention to share confidential information, morality of sharing confidential information, perceived proportion of other employees who would share confidential information and the likelihood of social approval by previous and current employers for sharing confidential information. Taking a path analysis approach, I discern which models (price-related, consensus-related or morality-related) best explain the mechanism responsible for the expressive effect of legality. The comparison among the models illustrates the relative legal repercussions of price, consensus and intrinsic motivation, as they relate to both employees' behavior and to their evaluations of the prevalence and desirability of trade secret sharing norms. Based on data collected from a sample of 260 high tech employees in Silicon Valley, I will demonstrate that the participants' respect for the law is based primarily on its morality and its association with the prevailing practice and not on its ability to exact increased social and career costs.

This paper examines whether the nature of information protected by trade-secrets law impacts departing employees' normative judgments of obedience to trade-secrets law. This examination is based on a comparison of three manipulated hypothetical scenarios: when the employee memorizes the confidential information, when the employee develops the confidential information herself and when the employee downloads the confidential information to her personal computer. The empirical analysis is based on data collected from a non-random multi-sourced sample of 260 high tech employees in Silicon Valley. These experimental manipulations enable me to examine and compare the contributions of tangibility and authorship to employees' normative evaluations of the sharing of confidential information/trade secrets. I conclude that while tangibility was a far stronger factor in employees' normative evaluations of trade secrets, authorship was strongly related to the morality of trade-secrets disclosure. In addition, based on a path-analysis approach, I examine and compare the ways in which social costs, legal costs, morality and perceived psychological contract contribute to the effects of tangibility and authorship on employees' normative evaluations of the sharing of confidential information/trade secrets. When attempting to explain the effect of tangibility, the expected social approval of the new firm proved to be the most important factor. I conclude with an examination of the behavioral importance of several legal paradigms to Silicon Valley high tech employees' views of trade secrets - general paradigms such as loyalty and ownership are considered in addition to more particular paradigms such as the "labour theory" and the memory rule.

The papers presented in this volume are based on the conference "Social Norms, Self-Interest and Legal Compliance" which took place in Bar-Ilan University and Hebrew University in May 2007. The conference focused on several key themes in the social norms literature, including critical approaches to the role of self-interest in social norms and cooperation models; comparative discussions of the various methodologies used in this literature (e.g. ethnographies, game-based experiments, experimental surveys); the nature of the effect of legal regulation on social norms; behavioral accounts of legal instruments that may enhance social cooperation; and explorations of the potential contributions of the social and cognitive psychology sciences to economic models of social norms. In this volume, we present six of the conference papers. All submitted papers were subject to anonymous peer review.