Abstract: Laws, policies, and incentives provide people with extrinsic reasons to engage in desired behaviours. But by doing so, they may attenuate or displace people’s intrinsic reasons for complying. In this chapter, I review theorising and empirical evidence on such crowding-out effects. I outline perspectives from psychology and economics on how laws, policies, and incentives may undermine people’s intrinsic motivation. Moreover, I describe how such insights have been applied to explain why laws, policies, and incentives may fail to increase compliance – or may even undermine it. The chapter then reviews the empirical evidence on these processes in environmental, organisational, and other legal settings. Although it is plausible that laws, policies, and incentives affect intrinsic motivation to comply, I conclude that empirical evidence of these processes is still modest. I end the chapter by outlining some important directions for future research and some (tentative) recommendations for policy.

Abstract: This chapter explores the importance of verifiability to contractual provision of incentives for contract performance or compliance. The crucial role of evidence and evidence-disclosure decisions is highlighted. Parties to a contract dispute convey information to the court by disclosing evidence. Actions taken by the parties in the productive phase (or primary activity) of their relationship influence the evidence that is available should a dispute arise. These considerations are important for practitioners in that 1) the lack of evidence to prove one’s claim may lead to some productive relationships being avoided or undertaken at a less than optimal level, and 2) the primary activity of the parties may involve steps to ensure relevant evidence should a breach occur. Many practical examples are discussed.

Abstract: Antitrust compliance scholarship, particularly with a focus on collusion, has been an area of study for some time (; ; ; ). Changes in technology and the rise of artificial intelligence (AI) and machine-learning have created new possibilities both for anticompetitive behavior and for detection of algorithmic collusion. To some extent, AI collusion takes traditional ideas of collusion and simply provides a technological overlay to them. However, in some instances, the mechanisms of both collusion and detection can be transformed using AI. This chapter discusses existing theoretical and empirical work, and identifies research gaps as well as avenues for new scholarship on how firms or competition authorities might invest in AI compliance to improve detection of wrongdoing. We suggest where AI collusion is possible and offer new twists to where prior work has not identified possible collusion. Specifically, we identify the importance of AI in addressing the “trust” issue in collusion. We also identify that AI collusion is possible across nonprice dimensions, such as manipulated product reviews and ratings, and discuss potential screens involving co-movements of prices and ratings. We further emphasize that AI may encourage entry, which may limit collusive prospects. Finally, we discuss how AI can be used to help with compliance both at the firm level and by competition authorities.

Abstract: Rule compliance (in organizations or society at large) may be strengthened or weakened by social contagion processes. Observing others’ (non-)compliance with rules influences one’s own likelihood of compliance. Extant literature shows two social contagion theories that can explain this phenomenon. First, the theory of normative conduct (TNC) (Cialdini et al. 1990) suggests that people interpret the observed behaviour of others (i.e. the descriptive norm) as adaptive for that context, resulting in rational imitation. Second, Goal Framing Theory (GFT) (Lindenberg and Steg 2007) suggests that we should look not just at the contagion of concrete behaviour but at the process that governs the contagion of the very goal to comply with norms and legitimate rules. This is particularly important because it predicts that observed (non-)compliance regarding one rule also affects (non-)compliance with other rules (‘cross-norm effects’). Because the goal to comply tends to decay, it needs continuous support from the observation of other people’s respect for norms and legitimate rules. Compliance and non-compliance are thus both self-reinforcing mechanisms. This has clear implications for policy which are discussed in this chapter, most notably the importance of a focus on legitimizing rules, so that they are interpreted as norms by the general public.

Abstract: This chapter focuses on private firms’ compliance with norms concerning transnational bribery. It begins with an overview of the regulatory context and obstacles to effective enforcement of norms against transnational bribery. It then reviews how compliance is defined, how it ought to be defined, and obstacles to the achievement of optimal compliance. Finally, it ends by focusing on the next steps forward in this space: (1) greater information sharing from private firms to outsiders in order to better analyze and evaluate the current efficacy of compliance programs targeting anti-bribery, and (2) increased coordination between enforcement agencies at the national and international levels to better tackle transnational bribery.

Abstract: In recent decades, a new approach to regulations and compliance was developed to complement the traditional instruments, such as command-and-control and economic instruments. This approach is termed ‘nudging’ or ‘choice architecture’ as it proposes to design the environment in which individuals make choices, in order to promote welfare enhancing behaviour. By utilising insights from behavioural sciences, nudges direct people’s behaviour without limiting their choices. In this chapter, we explain the concept of ‘choice architecture’ and review specific ‘compliance nudges’ in both the public and the private spheres. These include – amongst others – nudges that promote tax compliance, guideline-compliant drugs prescribing, and timely loan and fee repayments. The reviewed nudges include salience nudges, which emphasise certain aspects of a choice to make people focus on it; moral suasion nudges, which make more visible the moral consequences of people’s decisions; and descriptive or injunctive social norms nudges, informing people what others are doing or believe should be done. Furthermore, we discuss the empirical literature demonstrating the effectiveness (or lack of it) of compliance nudges. Whilst it is not easy to compare the effectiveness and cost-effectiveness of these nudges across different fields of application, some conclusions are reached regarding the effectiveness of compliance nudges in general. Finally, we point out the limitations of nudging compliance, compared to the traditional tools, and present some thoughts on possible future developments. The area of nudging compliance has the potential to develop rapidly as technological advancements make compliance monitoring, and automated nudging, possible. Whilst nudging is a promising way forward in compliance, ethical questions remain about the proper extent of its use, and further research is required into the long-term effectiveness of this technique.

Abstract: In this chapter we review the body of operations management (OM) literature that studies compliance issues. Researchers in OM focus on how operational-level decisions (such as process improvement, capacity, quality, and risk mitigation) impact performance outcomes in business and society. In recent years there has been growing interest among OM scholars in compliance issues, mostly in the context of environmental regulation and corporate social responsibility (CSR). The focus on operations casts new light and brings novel insights to compliance issues, and in some cases provides guidance for implementable solutions.

Abstract: The primary objective of food safety regulation is to reduce the risk of unsafe food making consumers ill. It is not always clear that rules produce the outcomes they aim at, and even when outcomes are achieved overall, it is far from certain that it is necessarily compliance with rules that makes the food safe, or that enforcement was the driving force behind it. Meaningful food safety compliance requires good alignment between regulatory design and desired outcomes. A key question for a policymaker intent on establishing a regulatory regime is “How much compliance will it need?”. This issue of how much compliance is needed to deliver the regulatory objectives is a challenge. While there is a solid body of literature on modern food law, there is less research done specifically on food regulation compliance. Recent research has shown the complexity of enforcement and “regulatory delivery” systems in food, but the link between such enforcement systems and actual compliance is far from simple. Effective food safety compliance requires a complex set of factors – good regulation, well-designed enforcement and, possibly most importantly, competence, knowledge, and understanding of food safety’s importance on the side of food business operators. The food safety regulatory regime presents a vast set of compliance issues, which makes it a useful domain in which to test models of compliance. This chapter discusses some of the existing literature on the topic, sets out this range of compliance issues as they have arisen in practice, and discusses some of the salient points arising.

Abstract: Neutralization theory helps explain how people overcome the negative emotions associated with engaging in crime. Developed by Gresham Sykes and David Matza (1957), neutralization theory proposes that people use linguistic devices (i.e., techniques of neutralizations) when presented with opportunities to engage in crime. Techniques of neutralization allow individuals to temporarily overcome the deterrent effects of negative emotions (e.g., shame and guilt), preserve their self-image, and reinterpret crime as acceptable. Research testing the theory shows that neutralizations play an important role in the decision to engage in crime and deviance. Evidence also shows that neutralization use can be nullified through a variety of crime prevention and intervention methods. However, there are theoretical issues surrounding the theory, especially in regards to understanding what factors may make people more or less likely to use neutralizations, whether neutralizations come before deviant behavior, whether neutralization use is stable over the life-course, and how neutralization use explains persistence and desistance in criminal behavior over the life-course.