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I am trying to find references that support an idea that I think I read in a book on theory of institutions. I can't find the original reference. Basically, I'd like to find anything that talks about number of rules and the strictness of enforcement as variables in controlling outcomes.

In the reference I can't find as I remember it, there was a case study related to OSHA or Worker's Compensation where increasingly strict safety policies caused an increase in accidents. The analysis ran that the existing policies were too stringent to allow workers to get their jobs done, and that the workers were deciding which rules they could ignore to get tasks completed on schedule. In this case, they had better outcomes by restricting the set of rules to a smaller set that were realistic and strictly enforced. Basically, too many rules resulted in workers prioritizing the rules to follow, while decreasing the rules allowed management to make the decision about which rules were truly the most valuable.

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    $\begingroup$ The blog post by economist Bryan Caplan, The Behavioral Effects of "Catholic" versus "Protestant" Ethics (econlog.econlib.org/archives/2012/04/the_behavioral.html), may be of interest. $\endgroup$ – BKay Mar 16 '15 at 12:39
  • $\begingroup$ Are you interested in the opposite? Where fewer rules resulted in worse outcomes? $\endgroup$ – Shane Feb 12 '16 at 19:36
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There is a movement in automotive and pedestrian traffic management called Shared Spaces. Under Shared Spaces the vast majority of formal and informal road signage is removed, such as stop signs, traffic lights, raised curbs, road lines. The idea is that these signs makes pedestrians and drivers run follow the signs instead of watching the road and the people on it. When their attention is redirected to city streets and the people on them the hope is that a safer and faster spontaneous order will result. This has been tried in a number of places, most famously Drachten, Netherlands. A study of the Drachten experiment indicated that this caused a significant reduction in traffic accidents in the town.

The UK's financial regulator, the Financial Services Authority, switched to a comprehensive principles-based regime in 2003 (Ford (2008)) from a previous regime of detailed rules. This might be another example of a policy intervention to reduce the number of rules. Assessing if this is working is a challenge. For one, international comparisons of financial regulation in the global financial crisis don't tell us much. Almost every rich country experienced failure or near failure of regulated entities. For another, people dispute just how principle versus rules based various national regulatory systems actually are (Black (2010)).

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I think in the literature of uncertainty I once read that increasing the number of laws increases the potential source of uncertainty. However, it was probably more related to investment than to working performance. However, if you are interested "Measuring economic policy uncertainty" by Baker, Bloom and David (2013) might be a good start.

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