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Abstract: This chapter studies the implications of behavioral ethics research to questions of legal compliance. Behavioral ethics emphasizes the concept of bounded ethicality, referring to a long list of biases and cognitive limitations that prevent people from making a full and candid evaluation of the ethicality of their own actions. In other words, people often act unethically not because they made a conscious choice to behave badly but because they were able to ignore, downplay, or justify their own misconduct. This chapter explores the meaning of behavioral ethics findings for questions of compliance with the law. That is, if people often ignore or downplay their own unethical choices, how can lawmakers and regulators act to improve compliance with the law? The chapter describes the central relevant findings of behavioral ethics research and the challenges these findings pose for legal compliance, and outlines possible solutions. In particular, we advocate a novel regulatory approach utilizing ethical nudges: regulatory interventions that are designed to improve ethical deliberations by potential wrongdoers.
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