How norms guide behavior in an uncertain world: an experimental law & economics perspective

In four independent Chapters, I examine how norms guide our behavior in an uncertain world. Methodologically, I apply the toolbox of experimental economics to research questions that are on the interface between economics and law (especially Chapter 1 and Chapter 2), sociology (especially Chapter 3), and social psychology (especially Chapter 4). Chapter 1 experimentally explores the effect of a provision from German copyright law – the so-called “Bestseller Paragraph” on market prices, on the number of deals struck and on perceived fairness. The results show that the provision leads to lower prices for copyrights, more copyrights trade, and the buyers express less ex-post discontent. Chapter 2 tests the effect of customary law on cooperation. If it is not backed up by sanctions, customary law is not more effective than mere custom in realigning individual action and social well-being. Yet if the emerging rule is perceived to be grounded in law, sanctions and custom are complements, while they are substitutes otherwise. Chapter 3 proposes a very simple and light-handed mechanism to sustain cooperation and test its performance in a rich laboratory environment. The mechanism moderates cooperation by controlling experiences. Contributions are considerably sensitive to such selective information. In Chapter 4, I test experimentally the robustness of social preferences to (1) information about others’ behavior and (2) self-reflection about the morally right behavior. I find that whereas information has virtually no effect, self-reflection changes social preferences substantially