Ethical Blind Spots & Regulatory Traps

Yuval Feldman - Bar Ilan University;

Yotam Kaplan – Bar Ilan University

-- Wrongdoing proliferates around ethical blind spots – scenarios and situations in which ordinary law-abiding people find it difficult to identify the harmfulness of their own actions. Ideally, regulators should act to diffuse ethical blind spots. That is, regulators should act to remove ambiguity and change the conditions that contribute to unethicality, in order to reduce wrongdoing. In practice, however, regulators might have a distorted incentive to conserve ethical blind spots – and build regulatory traps around them. Regulators seek to bolster their perceived effectiveness by demonstrating intensive and rapid enforcement activity. To do so, regulators might prefer to ignore the underlying cognitive causes of unethicality, and instead allow wrongdoing to continue while constantly sanctioning those wrongdoers who repeatedly fall into the same trap of unintentional misconduct.

Consider speeding tickets for example. Usually, speed limits make intuitive sense to people, and people find it easy enough to abide by them if they care to comply with the law. However, in some situations speed limits can be confusing or unintuitive. This can happen, for instance, when the speed limit drops for just a small section of a highway. This is an ethical blind spot in the sense that in such a location many law abiding citizens will find the law unintuitive, and wrongdoing will proliferate. Ideally, in such cases regulators should act to reduce ambiguity and diffuse the ethical blind spot, for instance by making sure that road signs in such areas stand out and are particularly clear and salient. Yet, in many cases, police will prefer capitalizing on the ethical blind spot in order to construct road traps and issue a multiplicity of tickets, thus transforming the ethical blind spot into a regulatory trap. Indeed, recent press reports from Israel show that a staggering percentage of road tickets originating from such road sections. This means that instead of actually removing the underlying causes of wrongdoing, regulators prefer to conserve them.

In recent our paper, “Ethical Blind Spots & Regulatory Traps: On Distorted Regulatory Incentives, Behavioral Ethics & Legal Design,” we further argue that technological advancements in law enforcement can exacerbate these distortions. Automated law enforcement technologies such as speed cameras or automated auditing tools are particularly effective at sanctioning easily identifiable and reoccurring violations. This means the introduction of such mechanisms make it even easier for law enforcers to construct regulatory traps.

Consider again the case of speed limits. Cameras make speed violations very easy to identify and sanction – especially so when those violations are reoccurring and follow known patterns. In other words, speed cameras are most effective when installed on an ethical blind spot. To maximize the number of issued tickets and reports, all that police needs to do is install speed cameras in those areas where people have been shown to systematically violate the speed limit. Violations in such locations are ubiquities, and – with the availability of speed cameras – extremely cheap to sanction.

This means that automated enforcement can make regulatory traps an even more dominant and profitable strategy for police and other law enforcers. Therefore, when speed cameras are available, ethical blind spots on the road are simply too profitable for regulators to diffuse. And indeed, police object to changing speed limits in those road sections that yield the greatest numbers of speeding tickets.

In our paper, we show that similar issues can be relevant to many areas of law, from financial regulation to tax compliance, consumer protection, and building regulations. To combat these disturbing trends, we must be more cogent of regulatory incentive structure, and of the way regulators are effected by the introduction of new law enforcement technologies.

11 views0 comments

Recent Posts

See All

Do crowdfunding investors value environmental impact?

Christoph Siemroth - University of Essex; Lars Hornuf - University of Bremen. -- Climate change is increasingly seen as a major societal problem. In our paper, "Do Retail Investors Value Environmental

Collectibles Tokenization & Optimal Security Design

Blair Vorsatz – The University of Chicago Booth School of Business -- Collectibles like art, wine, and classic cars have long interested investors, both for their attractive return profiles and for th