" (1997) According to McAdams, rational choice theorists in the 1980s "in various disciplines began to study norms." (1997) Specifically the work of Land and Cooter attempt to explain what it is that in areas of Asia, "ethnic minorities tended to dominate the middleman position in many industries." (McAdams, 1997) the conclusions of Landa and Cooter were that the "ethnically homogenous middlemen groups" are successful in nations that have no stable and reliable enforcement of legal contracts "because the groups' social connectedness gives their members a unique means of sanctioning contract breaches by other groups members" although be it means that are informal in nature. During this same time, Ellickson investigated how Stansta County, California ranchers go about settle disputes concerning property and concluded that "these ranchers enforce informal norm-based rules for disputes involving cattle trespass and boundary fences and thus resolve certain conflicts without the legal regime." (McAdams, 1997) the relevance of norms and a variety of public law issues have been examined by theorists: "whether weakened voting norms justify mandatory voting laws, whether norms of reciprocity explain why government must compensate for its takings, and whether the criminal prohibition of blackmail is efficient." (McAdams, 1997)
McAdams states that it is possible that "a norm may govern behavior so tightly that the choice between legal rules is irrelevant." (1997) McAdams states that law has the capacity to influence the norm and that it is advocated by some theorists that use of the law intentionally is to be toward the governing or shaping of norms. There has been concern expressed among some that "courts will undermine the very norms they seek to enforce, given that judges lack the local knowledge to understand the norm properly." (McAdams, 1997) Oftentimes, the impact on norms results from the attempt on the part of the state in regulating something else entirely. McAdams relates the "esteem theory of norm origin" and states that people prefer esteem or the "good opinion or respect of others..." (1997) According to McAdams a critical feature of seeking esteem is that the individuals care "how they are evaluated in comparison to others." (1997)
McAdams states that in summary of the esteem model: "The key feature of esteem is that individuals do not always bear a cost by granting different levels of esteem to others. Because the cost is often zero, esteem sanctions are not necessarily subject to the second-order collective action problem that makes the explanation of norms difficult. An individual maximizes her utility neither by hording all her esteem nor by granting equal esteem to everyone." (1997) Esteem has the power to "produce and increasingly powerful norm. Because the desire for esteem is relative, competition for esteem can progressive raise the standard the norm imposes." (McAdams, 1997)
The work of Richard H. McAdams entitled: "Group Norms, Gossip and Blackmail" published in the University of Pennsylvania Law Review relates that "Rational choice analysis of law and norms, has to date yielded several important insight..." And one of these is termed the "substitution hypothesis: legal and norm-based rules are alternative means of social control, and game theory reveals the conditions under which one mechanism governs behavior to the exclusion of the other." (1996) Scholars assert other rational choice or norms as what "might be termed the 'norm governance, hypothesis: Legal rules can shape norms and the state should cautiously use legal rules to facilitate or obstruct specific norms." (McAdams, 1996) Additionally some legal rules may effectively "interfere with dysfunctional norms, as one...
Blackmail is stated by McAdams to involve "...hatred, contempt, ridicule and impaired reputation..." all possible results or "sanctions for violating norms." (1996) McAdams states that blackmail is in no way limited to "threatening the shame or reputatioal loss that occurs for the purpose of enforcing norms." (McAdams, 1996) Blackmail also includes "threats to invoke these norm enforcement mechanisms. (McAdams, 1996) the assumption made in the work of McAdams is that: "people like to 'gossip'...people enjoy passing information about people they know to other people they know." (McAdams, 1996)
Because this is so McAdams states that gossip is "a consumption good, a parstime rather than a burden. " (McAdams, 1996) McAdams states that within the theoretical framework of the rational theory, a member of this group "will violate a norm when the expected benefit exceeds the expected cost." (McAdams, 1996) McAdams identifies the expected cost of having been in violation of a norm to depend "on the probability of detection and the sanction cost the member will bear if detected." (1996)
The theoretically-based and functional and representative formula are set out by McAdams follows:
An individual violates a norm only when b is greater than P (SC), where b is the individual's private benefit from violating the norm, sc is the sanction cost the individual will bear if his violation is detected, and P. is the probability of detection by at least one person. (1996)
McAdams goes on to state the next step of the formula as:
The effect of legalizing blackmail is ambiguous because it would likely increase P. But decrease sc. (1996)
McAdams states that allowing blackmail would increase P. Furthermore, the return on investments in information relating to norm violations is of a "pecuniary" nature insofar as the opportunity for the blackmail commission. It is likely that the majority of cases will be of the nature that the "pecuniary return will exceed the value an individual places on gossiping about such information. Thus, individuals will invest more heavily in discovering norm violation and the probability of detecting a violation will rise. Secondly, blackmail would effectively decrease sc, by replacing it with a lower blackmail price." (2006) McAdams states that rational choice theorists across various disciplines have turned their focus toward the "phenomenon of norms" in the attempt to utilize models that are economically inspired in the attempt to provide an explanation for the origin and function of norms. (See, e.g., James S. Coleman, Foundations of Social Theory, chs. 10, 11, 30 (1990); Robert Sugden, the Economics of Rights, Co-operation and Welfare (1986); Edna Ullmann-Margalit, the Emergence of Norms (1977); Robert Axelrod, an Evolutionary Approach to Norms, 80 Am. Pol. Sci. Rev. 1095 (1986); Michael Hechter, the Attainment of Solidarity on Intentional Communities, 2 Rationality & Soc'y 142 (1990); Philip Pettit, Virtus Normativa: Rational Choice Perspectives, 100 Ethics 725 (1990).
Robert Ellickson has focused study of rational choice in the legal frameworks. The work of Philip Pettit provides a definition of a norm stating: "A regularity, R, in the behavior of members of a population, P, when they are agents in a recurrent situation, S, is a norm if and only if it is true that, and it is a matter of common belief that, in any instance of S. among members of
1. Nearly everyone conforms to R.
2. Nearly every one approves of nearly anyone else's conforming and disapproves of nearly anyone else's deviating and 3. The fact that nearly everyone approves and disapproves on this pattern helps to ensure that nearly everyone conforms. Pettit, supra note 1, at 751. (12) Ellickson, supra note 1, at 181.
A as cited in McAdams (1996)
When no opportunity to blackmail exists and it is discovered by a member of the group that a norm has been violated, it is very likely that this will hit the gossip circuit. According to McAdams the gossip is suppressed by a blackmail contract:
that would enable the rest of the group to sanction the violator. A blackmail transaction replaces the sanction cost-sc-with a blackmail price-bp. If bp is equal to sc, then the substitution does not change the expected cost of violating the norm. But I argue that, on average, bp is less than sc. Thus, blackmail lowers the severity of the average sanction imposed on those whose norm violations are discovered. The first reason V will pay B. less than sc is that the two parties will negotiate between sc and B's lower reservation price. Ex-ante, there is no reason for V to pay more than sc to avoid incurring sc; therefore, bp can be anywhere between V's and B's reservation prices. B's reservation price is likely to be quite low, much lower than V's reservation price. The outcome of bargaining is partly a function of the differing ability of the parties to perceive each other's reservation price and to misrepresent their own. If skills are randomly distributed, the average outcome may be quite a bit below sc. Wealth constraints provide a second reason that bp is less than sc. Sometimes V will simply lack the wealth to pay a blackmail price equivalent to sc. For…
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