34 and Rabin, 2001; Rubinstein, 2008; Thaler and Sunstein, 2008; World Bank, 2014). Whether we call the Prisoner’s Dilemma by that name or some kindlier one like “cooperation with the fellow prisoner” can make a difference to how one plays the game. The words spoken before a person is made to do a task can affect how the task is performed (Hoff and Pandey, 2005). In some early papers, Sen (1973, 1993, 1997) showed how even the mere presence of certain options, which may never be chosen, can cause a reversal in preferences between two other options. He used this to argue that consistencies of certain kinds, such as the weak axiom of revealed preference may be violated by reasonable players.

All this being so, it is natural to ask if words uttered in the parliament and written down as statute, that is, some ink on paper, can under some circumstances influence people’s preferences, and, through that, behavior. If so, then are we not back to the traditional approach to law and economics, which was earlier rejected in this paper? The answer to the first question is yes, and to the second, no. The words and the utterances in a legal statute can affect preferences and behavior. The literature on the expressive function of the law alludes to this (Lessig, 1996; Sunstein, 1996a; Cooter, 1998). However, there is no reason to believe that the effect of the law is for people and enforcers to do literally what the law commands. It is one thing to agree that the law can affect behavior and quite another to assume that the affect will be of the kind that is literally specified by the law.

In getting into this matter, let me begin with an example. For this, I shall return to the subject of food subsidies discussed above. Consider the case of a nation adopting a new law which requires the government to give food vouchers or stamps to the poor. Some may argue that the reason this works in many societies is because if after the legislature passes this law the functionaries of the government do not give out the vouchers and food shops do not give food in exchange for the vouchers, ordinary people will be angry with the government functionaries and stigmatize them. It is this fear of stigma and ostracization that makes the bureaucrats perform their designated task; and that in turn is what makes the law effective<sup>27</sup> . And conversely, if there is no such law and some bureaucrats printed out vouchers and gave them out to people, that would make people angry and lead them to stigmatize the bureaucrats. It is these responses that keeps the government straight.

This argument is correct in the sense that governments do often perform their task well because of this kind of citizen monitoring. What is however important to realize is that this argument takes us beyond the standard model of law and economics. That model, as propounded by Becker, was so effective because of its sparse characterization of human preferences. Human beings had no innate attitude to the law. A punishment for driving fast was like a higher price of oranges. They made people desist from driving fast the same way that the higher prices reduces 27 This is an argument that came up following my D. Gale Johnson Lecture at Chicago University.