Laws and Authority

TitleLaws and Authority
Publication TypeJournal Article
Year of Publication2017
AuthorsMailath GJ, Morris S, Postlewaite A
JournalResearch in Economics
Pagination - 42
Date PublishedMarch 2017
ISBN Number1090-9443, 1090-9443
KeywordsBelief, Game Theory and Bargaining Theory: General (C70), Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making (D91), Search, Learning, Information and Knowledge, Communication, Belief, Unawareness (D83)
AbstractA law prohibiting a particular behavior does not directly change the payoff to an individual should he engage in the prohibited behavior. Rather, any change in the individual's payoff, should he engage in the prohibited behavior, is a consequence of changes in other peoples' behavior. If laws do not directly change payoffs, they are "cheap talk," and can only affect behavior because people have coordinated beliefs about the effects of the law. Beginning from this point of view, we provide definitions of authority in a variety of problems, and investigate how and when individuals can have, gain, and lose authority.