Monday, February 18, 2008

Why people break rules

This is a topic I have been thinking over for some time. It is disheartening to see that breaking rule is becoming a norm across our country. As per a recent news article that is what even the government is observing. We dont need anybody's statement to testify this as we see it all around us. This post is an attempt at understanding why the law of the land is broken?

Let us first try to understand why laws or rules are brought into place. A rule is an attempt to make the playing field level. It identifies a set of criteria based on which decisions will be taken in a system. Forming a queue is the simplest form of rule. It identifies first come first serve basis for serving a person, no parking zones are meant to be kept free for free traffic flow so on an so forth. Becauase rules are more like cartels. The member who deviates has an incentive to do so than what he would achieve by staying in the cartel. There are certain market conditions in which cartels work. I will not get into the details of what cartels are (follow the link for that).
But lets see how industry avoid or tries avoiding breaking of a cartel.
First of all and most importantly, every member can be a whistle blower. Which does not happen efficiently in case of rules or laws. Every law abiding citizen should bring to light a violation because it is more like someone is reaping the benifit of breaking a cartel and stealing a part of the common public good that a cartel pomises. Secondly the cost associated with breaking of a cartel should be very high. A part of the punishment should be that you shouldnt be taken back into the system untill you spend sufficient time outside it or pay a hefty financial penalty. For example if you are seen building an extra floor over and above the permissible limit, your construction license should be cancelled for say 5 years. The punishment should be greater than the benefit one derives out of breaking a carltel.
Why do you think this wont work?
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