The Expressive Function of Trade Secret Law: Legality, Cost, Intrinsic Motivation, and Consensus

Authors


  • Special thanks to Robert Cooter, Robert MacCoun, and Philip Tetlock from the University of California, Berkeley. For their insightful comments and suggestions, I thank Hadar Aviram, Adam Badawi, Rena Bogoch, Meir Dan-Cohen, Ted Eisenberg, Assaf Hamdani, Valerie Hans, Gilad Hirschberger, Alan Hyde, Miri Gur-Arie, Mark Lemley, Peter Menell, Oren Perez, Ilana Ritov, Daniel Rubinfeld, AnnaLee Saxenian, Alois Stutzer, David Teece, Tim Urdan, Frank Zimring, and the participants of the Conference on Behavioral Law and Economics at the University of Haifa and Conference of Empirical Legal Studies, University of Texas at Austin. For their excellent help, I thank my research assistants, Zev Iversen, Nitzan Woulkan, Roy Grosberger, and Omer Wagner. For statistical consulting, I thank Tammy Shterental. The article was presented in the First Conference of Empirical Legal Studies, University of Texas at Austin, October 2006.

*Assistant Professor, Faculty of Law, Bar-Ilan University, Ramat-Gan 52900, Israel; email: yfeldman@mail.biu.ac.il.

Abstract

In recent years, leading legal scholars have proposed many competing models for the expressive function of the law. This article attempts to organize and compare the competing models while examining a real-life dilemma—sharing confidential information when one moves from one company to another—and explores the mechanisms through which the law can affect people's behavior. The article examines the expressive impact that results when trade secret laws are experimentally “primed” on factors such as: intention to share confidential information, morality of sharing confidential information, perceived proportion of other employees who would share confidential information, and the likelihood of social approval by previous and current employers for sharing confidential information. Taking a path analysis approach, I discern which models (cost related, morality related, coordination based, or reflection of consensus) best explain the mechanism responsible for the expressive effect of legality. The comparison between the models illustrates the relative legal repercussions of price, consensus, and intrinsic motivation as they relate to employees' evaluations of the prevalence and desirability of trade secret sharing norms. Based on data collected from a sample of 260 high-tech employees in the Silicon Valley, the article demonstrates that—at least in the context of trade secret law—the expressive impact is based primarily on morality and less on the law's ability to impose social and career costs.

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