Corporate Transparency and Human Rights

Abstract

This article uses information theory and game theory to look at ways to make corporate codes of conduct more effective in promoting human rights. It explores the benefits of transparency, and imports the concept of separating equilibrium from game theory. Using these concepts, one can create a system that will raise overall information costs selectively for those multinational corporations (MNC's) that ignore or abuse generally-accepted international human rights standards. Among the elements of such a system would be lowered information acquisition and verification costs for parties concerned with human rights issues, and elimination of certification systems that impose lower costs upon human rights violators than upon human rights respecters. Through these approaches, the costs of participation would be significantly lower for those MNC's that comply with human rights norms than those that do not, and MNC's would be put to the open choice of whether to participate in transparent reporting and code systems.

Keywords: human rights law, game theory, signaling, information law, transnational corporations, TNC's, development law, development theory

JEL Classification: C70, C72, D70, D81, D82, D83, F23, K33, L30, M14