Anti-Social Norms, Risky Behavior

Corporate Boards: Managers of Risk, Sources of Risk, Robert W. Kolb & Donald Schwartz eds., Wiley-Blackwell, 2009

Posted: 9 Mar 2009

See all articles by Reza Dibadj

Reza Dibadj

University of San Francisco - School of Law

Date Written: March 7, 2009

Abstract

To understand how boards can serve as both managers and creators of risk, a prerequisite would be to have a satisfactory framework within which to conceptualize board behavior. Unfortunately, such a basic structure is lacking. This chapter explores this curious anomaly and proposes that the intersection of boards and risk can only be understood through a counter-intuitive application of sociological norms. Only once existing misconceptions are set aside can reform follow.

The argument is structured in three parts. Part I explores the limitations of conventional models: neoclassical economics, industrial organization (IO), and institutional economics. It also explores why the behavioral project - whether expressed through behavioral economics or organizational behavior (OB) - is incomplete. Based on the notion of "organizational behavioral economics," Part II then proposes a structure within with to understand board behavior using the concept of norms. Finally, Part III presents suggestions for reform, with an emphasis on enhancements to corporate and criminal law.

Keywords: boards, risk, norms, behavioral economics

JEL Classification: D21, D70, D81, K22

Suggested Citation

Dibadj, Reza, Anti-Social Norms, Risky Behavior (March 7, 2009). Corporate Boards: Managers of Risk, Sources of Risk, Robert W. Kolb & Donald Schwartz eds., Wiley-Blackwell, 2009, Available at SSRN: https://ssrn.com/abstract=1355345

Reza Dibadj (Contact Author)

University of San Francisco - School of Law ( email )

2130 Fulton Street
San Francisco, CA 94117
United States
415-422-5253 (Phone)

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