Document Type

Article

Publication Title

University of Illinois Law Review

Abstract

In this Article, we undertake the first analysis of optimal individual and corporate liability for organizational misconduct that incorporates crucial insights from psychology about people’s motivations, their decision-making processes, and how laws and organizations affect people’s behavior. Specifically, we develop an evidence-based deterrence theory predicated on empirical evidence from psychology that people have other- regarding preferences, the law can deter by expressing social condemnation as well as through sanctions, people rely on intuitive decision-making processes to make most decisions, and organizations influence deterrence by shaping employees’ decision-making environment. Our theory improves on both classical deterrence theory and expressive law theory. We show that optimal deterrence through expressive law requires both individual liability and corporate liability that both eliminates companies’ expected profit from misconduct and induces them to detect, self-report and cooperate. Our framework has implications beyond liability for organizational misconduct.

First Page

673

Volume

2023

Publication Date

2023

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