Orly Lobel

Citizenship, Organizational Citizenship, and the Laws of Overlapping Obligations

Ranging from strict disclosure prohibitions to generous monetary incentives for informants, the legal approaches to conflicts between organizational loyalty and legal compliance reveal a deep ambivalence about the role of individual dissent in group settings. In fact, recent constitutional and private law cases have had the undesirable effect of denying protections to those most likely to identify and report corporate misconduct. This article argues that, particularly in light of broad shifts from command-and-control regulation to new governance processes, the corollary to skepticism about governments ability to remedy organizational illegalities is the ability of individuals to internally confront violations. The article develops a way to reconcile the pervasive tensions of conflicting obligations by connecting organizational citizenship to both institutional learning and broader civic obligation and by developing a systemic linkage between the substance of dissent and its form. It calls for the adoption of sequenced protections creating a reporting pyramid that prioritizes internal problem-solving when feasible. The analysis of mediating the conflicting demands of citizenship and organizational citizenship extends more broadly to legal debates on family immunities in criminal procedure, civic disobedience and military hierarchies, and professional roles in legal ethics, bringing analytical clarity to dilemmas about following rules while maintaining independent judgment.

Innovation Motivation: Behavioral Effects of Post-Employment Restrictions

While post-employment restrictions may encourage firms to invest in employee skill and research and development (R&D), such restrictions may also under certain circumstances discourage employees from investing in their own human capital and work performance. The article reports the findings of an original experimental study designed to unpack the effects of post-employment restrictions on task performance. The results demonstrate that under certain conditions of contractual restrictions, when tasks involve pure effort and are relatively easy to perform, individuals will abandon the tasks at higher rates, spend less time on task, and overwhelmingly fail more often to find the correct solution. At the same time, our findings show that under the same restrictions but different types of tasks – tasks that invoke internal talent and creativity rather than pure effort – some of these effects, including time on task and quality of performance, largely disappear. Significant gaps in task completion remain even under the more creative tasks. Traditional economic models view post-employment restrictions, primarily covenants not-to-compete, as necessary limitations stemming from the assumption that absent such contractual protections, employers would under-invest in research and development and employee training. This study enriches the analysis of human capital development and proposes a dyadic-dynamic investment model. It demonstrates in an experimental setting that regulatory and contractual background affects motivation and performance. The article complements recent empirical evidence about positive spillovers effects stemming from increased labor mobility with a behavioral analysis that suggests further positive effects, offering a nuanced view of the costs and benefits of post-employment contractual and regulatory restrictions.

Orchestrated Experimentalism in the Regulation of Work

This book review of MIT Economists Osterman, Kochan, Locke and Piore’s Working in America: A Blueprint for the New Labor Market considers the inadequacies of current workplace structures and the challenges facing regulators of the new economy. The review explores the implications of Blueprint to law reform, particularly labor and employment laws, but also other fields of law, including welfare, immigration, and taxation. It discusses the problem of the enforcement gap and the prevalence of dominant corporate culture even in situations where legislative reform is made consistent with new workplace realities. Finally, the review evaluates the core structure of the vision advanced in Blueprint ‒ democratic experimentalism in the field of work. Lobel argues that while Blueprint begins its inquiries with the promise of the economy as a social institution, its concrete proposals often do not adequately address the core tensions between economic and social interests.

Liberalism and Lifestyle: Informing Regulatory Governance with Behavioural Research

Regulators around the world are attempting to reconcile the changing demands of 21st century economies with the insights two schools of thought, New Governance and Behavioural Economics, are offering. The common emerging theme, expressed by the UK and American administrations as well as in other democracies around the world, is that instead of focusing solely on substantive prohibitions and adversarial enforcement, regulation should centre on designing processes and systems through which private ordering and individual decision-making are directed and improved. In its ideal, social science research is apolitical. Studies in psychology and economics, whether empirical or theoretical, are neither progressive nor conservative. They are meant to improve our understandings of how society operates. This article responds to central concerns about the behavioural enthusiasm which has pervaded regulators around the world: the concern that the shift away from traditional regulation is in fact a shift away from regulation and public action to an era of devolution and deregulation; the concern that the behavioural interventions that are adopted are paternalistic in their intent to direct, or, more disturbingly, manipulate, the lifestyles of private individuals; and the concern that we know too little both about what consists of healthy lifestyles and about the psychology of decision-making for us to accept programmatic policies based on behavioural nudges in field of health policy.

Individuals as Enforcers: The Design of Employee Reporting Systems

This chapter presents a unique perspective on whistleblowing, combining behavioral and organizational perspectives of employee motivation to engage in social enforcement. The chapter is based on a series of experimental studies conducted by the collaborators. In our studies, we analyze the interactions among several types of factors. First, we describe cultural differences and the ways a country’s attitude and history affect decisions to blow the whistle. Second, we systemically show complex motivations in the decision to report misconduct, including both intrinsic and extrinsic factors. Third, our experiments provide unique insights about the design of the law and the various incentives it can offer to support social enforcement. The studies improve our understanding of the costs and benefits of different regulatory systems and the inadvertent counterproductive effects of certain legal incentives. Based on these studies, the chapter explores the comparative advantages of various incentive structures and aim for a better fit between regulatory design and organizational and individual motivation, not only in compliance as many of the other chapters in this volume suggest but also in reporting the incompliance of others.

Behavioral Trade-Offs: Beyond the Land of Nudges Spans the World of Law and Psychology

The purpose of this chapter is to illuminate the breadth and potential of behaviorally informed legal policy. We argue that currently policy approaches that encompass behavioral insights often overlook a fuller picture of psychology. A narrow approach limits the successful integration of behavioural insights into the legal system. This chapter suggests ways to move toward harmonization between the various law and psychology schools of thought. The need for such harmonization stems not only from the independent development of each strand, absent, for the most part, coherent integration and exchange, but also because this lack of awareness of the insights developed in related areas of law and psychology may lead to very limited and sometimes inadvertent policy recommendations. To meet this challenge, the paper suggests the need to balance some of the tensions which emerge from different aspects of psychology into a proposed framework of behavioural trade-offs. In particular we will focus in this chapter on taxonomy with four main trade-offs. Outcome vs. Process; Invisible vs. Expressive Law; Trusting vs. Monitoring; and Universal vs. Targeted Nudging. By demonstrating how actual policy concerns could be better understood by accounting for these trade-offs, the chapter will contribute to a more informed and nuanced path of EU behavioural-based legal policy.

Healthy Choices: Regulatory Design and Processing Modes of Health Decisions

This article demonstrates experimentally that individuals making decisions about their health management are affected by the decision making environment and that law and policy can serve important roles in improving the decision environment. With the support of a generous grant from the Robert Wood Johnson Foundation, we conducted two series of experiments. First a lab experiment with approximately 700 respondents and next a web-based experiment with over 3000 respondents, including 300 medical doctors. In each of the experiments, in addition to manipulating the decision making environment and choice sets, we manipulated the state of the decision maker. In the first series of experiments we used the psychological mechanism of cognitive depletion and in the second series we tested the effects of cognitive overload. Most broadly, unlike past measures of risk aversion, our studies demonstrate that preferences for risk are not fixed in an individual but rather are highly sensitive to the role, context, and state of the decision maker in patterned ways. The project provides new evidence that cognitive processes affect decision making and judgment of risk, often leading to medically suboptimal choices. The lab studies suggest that often people process risk sub-optimally, e.g. favoring potentially harmful omissions over less harmful acts and being influenced by the order of warnings or choices, rather than their substantive value.

Coase and the Platform Economy

This Chapter analyzes the ways in which digital platforms such as Uber and Airbnb are perfecting the deal and lowering transaction costs. The chapter argues that the three stages of pre-deal, deal-making, and post-deal, 1) search costs; 2) bargaining and decision costs; and 3) policing and enforcement costs, may benefit from the digital platform. Each stage depends on enhanced information and optimal matching to reduce costs. The chapter suggests that the platform – based on digital large scale multi-sided networks and sophisticated algorithmic pricing – impacts the relevant transaction costs at all three stages. It then argues that regulators must consider the opportunities that come from the platform delivery as well as the possibility that certain traditional regulations become redundant by platform innovations.

Platform Market Power

The rise of the platform economy has been the subject of celebration and critique. Platform companies like Uber, Airbnb, and Postmates have been rightfully celebrated as positively disruptive, introducing much–needed competition in industries that have been otherwise over–mature and stagnant. However, some of the leading new platforms have had such meteoric success that their growing market dominance and technical capacity raise questions about new forms of anti-competitive practices, and negative impacts on consumer and employee welfare. In this Essay, we develop a framework for considering the market power of platform companies that use digital technology to connect a multi-sided network of individual users. Specifically, we use the example of Uber as a lens to identify eight questions that are important for assessing platform power. These questions address the way a range of issues play out in the platform context, including more traditional competition concerns around innovation, regulatory arbitrage, barriers to entry, and price setting through platforms’ use of the network form to coordinate transactions, the use of digital pricing, and the use of pricing bots. These questions also focus on new concerns about power derived from data collection and use; the use of data to expand into other markets; and the implications of market power for consumer choice about personal privacy. Together, these questions provide policymakers a framework to consider whether and how questions of market power (and competition more generally) may pose complexity or require analytic adjustments—and how the development of platforms implicates both new opportunities for, and challenges to, consumer and employee welfare in the digital context.

Risk Management for the Future: Age, Risk, and Choice Architecture

How can regulation in an era of personal responsibility aid people to make the optimal decisions about their future risks, savings, and retirement? This study aims to deepen our understanding of how different age groups process choices in relation to future risk and retirement planning in diverse decision-making environments. In a series of experiments, we examine how age and the life cycle interact with the decision-making environment concerning savings, retirement and well-being. Across multiple experiments we find that when cognitive resources are available older participants opt for more prudent and future oriented financial and retirement choices, but that this pattern does not hold in situations that do not allow the luxury of executive control override. Moreover, in some instances, we find an increased effect of resource depletion for older compared to younger participants. At a theoretical level our findings suggest that much of the difference in financial choices between older and younger decision makers rests in the ability of each age group to override their intuitive and automatic responses to such decisions. At the policy level, as the regulatory field is moving from command-and-control rules to the provision of menu options and choice architecture, our findings provide potential guidelines for better designing retirement and savings plans, such as the implementation of SMT-style programs and the encouragement of annuity over lump sum retirement benefits.