Beyond institutional enforcement. Do institutions encourage prosocial behavior outside of their intended scope?

Description

Many economists believe that the success of a society is largely determined by its formal and informal institutions. They argue that well-functioning laws, organizations, and social norms are essential ingredients for long-term economic prosperity and peaceful coexistence.

But institutions are limited in scope and direct influence, so socially beneficial behavior may be dependent on how far the effects of institutions reach.

In a paper in the American Economic Journal: Microeconomics, authors Florian Engl, Arno Riedl, and Roberto Weber ran a laboratory experiment to explore how institutions shape behavior outside of their direct scope of influence. They found empirical evidence that institutions can spill over into domains where they don’t have authority.