The John M. Olin Center
Paper Abstract
540. Steven Shavell, Do Excessive Legal Standards Discourage Desirable Activity?, 2/2006; subsequently published in Economic Letters, Vol. 95, Issue 3, June 2007, 394-397.
Abstract : Overly strict legal standards are commonly thought to discourage parties from engaging in socially desirable activities. It is explained here, however, that excessive legal standards cannot lead to undesirable curtailment of activities when legal standards are enforced by liability for negligence, essentially because parties can choose to be negligent rather than comply. But excessive legal standards can lead to undesirable reduction of activities when adherence to the standards is required by the regulatory system.