Laws and Norms with (Un)Observable Actions - Claude Fluet Murat C. Mungan

Both the size of the reputational incentives and the way it responds to the prevalence of the act then depend in an intuitive way on how frequently the act is committed. [...] The reputational sanctions are then mainly driven by the stigma associated with the bad act, rather than the honor associated with the good act, in the sense that committing the bad act signals a much greater negative deviation from the average person than the good act signals a positive deviation from the same. [...] 12554): “The social multiplier measures the ratio of the effect on the average action caused by a change in a parameter to the effect on the average action that would occur if individual agents ignored the change in actions of their peers.” 13 The first term is the net direct benefit from the pro-social act. [...] The thinner curves correspond to the shift in the distribution of types and to an ‘equivalent’change in the bonus, respectively.16 To illustrate, in the (v∗,Λ) plane of fig. [...] For instance, the magnitude of the resource cost c and of the externality e, as well as the relative importance of reputational benefits µ and the informativeness of the signal all affect the critical λ.