A Focal Point Theory of Expressive Law

McAdams, Richard H.

doi:10.2307/1073827

Cited by 221 publications

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“…"When people are otherwise at a loss for how to coordinate, it takes surprisingly little to guide expectations and behavior" (Richard McAdams (2000) p. 1652). In the paper we consider a coordination game with a large number of equivalent NE, where players have a difficult time coordinating.…”

Section: Discussionmentioning

confidence: 99%

On the role of non-equilibrium focal points as coordination devices

Bosch‐Domènech

Vriend

2013

Journal of Economic Behavior & Organization

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Abstract:Considering a pure coordination game with a large number of equivalent equilibria, we argue, first, that a focal point that is itself not a Nash equilibrium and is Pareto dominated by all Nash equilibria, may attract the players' choices. Second, we argue that such a non-equilibrium focal point may act as an equilibrium selection device that the players use to coordinate on a closely related small subset of Nash equilibria. We present theoretical as well as experimental support for these two new roles of focal points as coordination devices.J.E.L. classification codes: C72, C91

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Section: Discussionmentioning

confidence: 99%

On the role of non-equilibrium focal points as coordination devices

Bosch‐Domènech

Vriend

2013

Journal of Economic Behavior & Organization

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“…309 According to McAdams, information supplied by legal institutions can be particularly effective at creating focal points for coordination because of the publicity accorded legal information, its unique abilities to be pronounced by public officials and backed by sanctions, and the reputation of judges and legislators for predicting behavioral change. 310 These features of information disclosure by legal institutions suggest that actors will often respond to that information even if they do not fear sanctions and are agnostic on the legal institution's moral authority.…”

Section: E Toward Information Environments: Extending Reputational Rmentioning

confidence: 99%

Reputational Regulation

Parella

2017

SSRN Journal

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When organizations act in ways that offend the public interest, parties seeking to change that behavior traditionally turned to litigation to force these organizations to reform, whether by command or consent. For example, following Brown v. Board of Education, "structural reform litigation" forced large-scale organizations, from school boards to prisons, to change their practices. Similarly, federal prosecutors have used agreements with large corporations to introduce significant structural reforms. This Article identifies an alternative strategy for organizational change that relies on the indirect reputational effects of litigation. Under this approach, organizational change does not result from court order or parties' settlement but from the informational effects of litigation: litigation transmits information about an organization into the public space; this information has reputational consequences for the affectedCopyright REV. 805, 848-60 (1990).5. Stephen Rushin, Structural Reform Litigation in American Police Departments, 99 MINN. L. REV. 1343REV. , 1378REV. -96 (2015.6. Adam Chandler, Walmart, Whole Foods, ATLANTIC (Dec. 16, 910DUKE LAW JOURNAL [Vol. 67:907 users' data; 7 the National Football League (NFL) hides the effects of head trauma; 8 Wells Fargo creates "fake accounts." 9 While "structural reform prosecution" has been used to change private organizations, this Article identifies an alternative strategy that relies on the informational effects of litigation. As this Article explains, litigation releases information about organizational conduct into the public domain. This information has reputational consequences for the affected organizations. Organizational change is a response to that reputational shaming. 10Under this approach, organizational change does not result from a court order or parties' settlement. The engine for change is reputation, and the fuel for that engine is information. Over the past few years, for example, the NFL has faced a series of lawsuits from injured players who claimed that the NFL knew about the dangers of head injuries but hid those risks and failed to mitigate those risks.11 As attention to head injuries from the media, athletes, and fans grew, the NFL introduced a series of new protocols to prevent and better understand head injuries, culminating in 2016's $100 million initiative "Play Smart, Play Safe. 14 Reputational effects are not unique to litigation, but also apply to other adjudicative processes, such as agency proceedings; organizational change can follow from the reputational effects of all these adjudicative processes. 15 For example, Wells Fargo angered many of its banking customers when it was revealed in September 2016 that Wells Fargo's employees had "secretly created millions of unauthorized bank and credit card accounts-without their customers knowing it-since 2011." 16 The Consumer Financial Protection Board (CFPB) fined Wells Fargo $100 million plus penalties for its sales practices, but that figure is only a fraction of t...

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“…Second, law can serve as a coordination device (Postema, 1982;McAdams, 2000). This is true even in the absence of effective sanctions by a governmental authority: even when states are weak, resorting to a shared set of legal concepts, as represented by Roman and canon law, can facilitate interaction between parties.…”

Section: The Establishment and Importance Of A System Of Lawsmentioning

confidence: 99%

Medieval Universities, Legal Institutions, and the Commercial Revolution

Cantoni¹,

Yuchtman²

2012

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Europe experienced a "Commercial Revolution" in the late Middle Ages. We present new data that document this transformation using information on city incorporation and market establishment. We then test whether universities played a causal role in expanding economic activity, examining the consequences of their exogenous establishment in Germany following the Papal Schism in 1378. We find that the trend rate of market establishment breaks upward just when the first German university was established; this break is greatest where the distance to a university shrank most. We argue that the link between universities and greater economic activity involved the development of formal legal and administrative institutions.

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A Focal Point Theory of Expressive Law

Cited by 221 publications

References 0 publications

On the role of non-equilibrium focal points as coordination devices

On the role of non-equilibrium focal points as coordination devices

Reputational Regulation

Medieval Universities, Legal Institutions, and the Commercial Revolution

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