Rules Change the Cost of Action

Imagine that you are ready to submit a request, but one additional approval is required before it can proceed.

The action remains possible. Nobody has prohibited it. Yet the requirement changes what acting involves. You must identify the right person, explain the request, wait for a response and accept the possibility that the process will need to be repeated.

Some people continue immediately. Others postpone the task, choose another route or abandon it.

The rule has not selected one behaviour. It has changed the conditions surrounding several possible behaviours.

That is how rules often influence action: they alter what different options require, risk, permit or make possible.

The cost of action is more than money

An action cost is anything a person must give up, risk, endure, obtain or coordinate to take one option rather than another.

The cost might be financial, but it can also involve time, effort or attention. A person may need to learn a procedure, collect documents, wait for a decision, depend on someone else’s approval or risk having to start again.

Rules can create learning costs: the effort required to discover that a process exists, determine whether it applies and understand what it requires.

They can create compliance costs: completing forms, supplying evidence, attending appointments or following a required sequence.

They can also create psychological costs through uncertainty, frustration, stigma, embarrassment or a sense of lost autonomy.

These burdens do not necessarily appear in the text of a rule, but they can influence whether action proceeds.

Not every requirement is harmful. Additional checks can prevent error, protect participants or make later decisions easier to review. A burden imposed now may reduce uncertainty or risk later.

The important question is what the rule changes, who carries the burden and which alternatives become comparatively easier.

Cost is relative to another option

An action is not simply costly or costless. Its cost matters in relation to something else.

The person facing the approval requirement might compare proceeding now with waiting. They may choose a different process, reduce the scope of the request or decide that inaction is easier. When one route becomes more demanding, another can become more attractive even if that alternative has not changed directly.

A ten-minute requirement may have little effect when the intended action is highly valuable and no alternative exists. The same requirement may stop action when the benefit is uncertain, the person is already overloaded or another route is available.

The comparison need not be conscious or numerical. People may respond through deliberate evaluation, but also through habit, emotion, social interpretation or expectations learned from previous experience. Someone may simply know that one route usually creates trouble or that delay removes the immediate demand.

A rule influences behaviour when it changes the balance among possible responses.

Rules can raise, lower or redistribute costs

Rules do more than prohibit and punish.

A requirement can add documentation, eligibility conditions or procedural steps. A prohibition can restrict authorised action and raise the risk of acting anyway. A penalty can attach an expected consequence to violation.

Rules can also lower costs. Permission can remove an authorised barrier. A clear procedure can reduce uncertainty about what to do next. A standard format can make coordination easier. A reward can offset effort or increase the expected benefit of acting.

Permission removes only one kind of barrier. A person may be authorised to act while still lacking information, time, support or material capacity. Likewise, prohibition does not make action physically impossible. It changes its recognised status and the consequences that may follow.

Rules can redistribute costs as well.

A documentation requirement may increase work for an applicant while making review easier. A stricter approval process may reduce risk for an organisation while increasing delay for the person seeking action. Standardisation may simplify coordination across many cases while becoming burdensome for someone whose circumstances do not fit the standard route.

Costs can also move across time. An immediate burden may reduce later uncertainty, while an easy shortcut may create future risk.

The effect depends on where the burden appears, when it appears and who must carry it.

A rule on paper is not yet a behavioural effect

A rule specifies or structures conduct. An institution is the wider arrangement of roles, expectations, authority and repeated interaction through which that rule may operate.

This distinction matters because wording alone does not determine implementation.

A rule may be unknown, ambiguous or inconsistently applied. Someone must decide whether it applies, what counts as compliance and how to respond when its requirements are not met.

Ambiguity creates room for judgment. That discretion can help people adapt a general rule to unusual circumstances, but it can also make the practical cost unpredictable. Two people facing the same official wording may encounter different delays, requirements or consequences.

Formal and informal rules may also interact. Formal rules are officially authorised and connected to recognised enforcement channels. Informal rules are socially enforced expectations about conduct outside those official channels. A repeated practice is not automatically a rule; participants must recognise some expectation or consequence around it.

An informal rule can reinforce an official requirement or undermine it. People may follow a formal procedure on paper while relying on a different practical understanding of how things are actually done.

Clarity can reduce one kind of uncertainty by making the required sequence easier to understand. It does not establish that the rule is fair, effective or directed toward the right outcome.

Behaviour depends on how consequences operate

The behavioural influence of a penalty depends not only on what it states, but on how it is implemented, experienced and anticipated.

A consequence can affect action through its size, but also through how likely it seems, how quickly it follows and whether the participant expects to bear it. A severe penalty that is rarely applied may influence behaviour less than a smaller but predictable consequence.

That does not establish a universal rule that certainty always matters more than severity. It shows why the wording of a sanction is not enough.

Monitoring can make detection seem more likely. Selective enforcement can create different expectations across participants. Delay can weaken the immediate relevance of a consequence or move its burden into the future.

People do not need to calculate these dimensions precisely. They may respond to experience, observation, emotion or what others tell them.

A consequence can also be imposed on someone who did not know about the rule or anticipate its enforcement. Its material effect may then alter later access, capacity or behaviour. Expected consequences matter, but expectation is not the only pathway through which rules operate.

The same rule can create different burdens

Consider two people asked to obtain the same additional approval.

One knows the procedure, has flexible time and can easily contact the authorised person. The other lacks procedural familiarity, cannot absorb delay and has no assistance.

The formal requirement is identical. The practical cost is not.

Participants may differ in:

• information;
• available time;
• financial capacity;
• access to support;
• authority;
• exposure to monitoring;
• ability to appeal;
• availability of alternatives.

Equal wording therefore does not guarantee equal action conditions.

This is initially a descriptive claim. Whether a difference in burden is justified is a separate question. Some distinctions may serve a legitimate purpose; others may be arbitrary or harmful. D10.20’s narrower point is that the behavioural effect of a rule cannot be understood from its wording alone.

If one person completes the process and another does not, that difference need not reveal motivation or preference. They may have encountered different practical costs.

People adapt around rules

Rules rarely produce only compliance or refusal.

People may comply as intended. They may adapt by meeting the formal requirement while changing as little else as possible. They may avoid the regulated route or redirect behaviour into another time, category or setting. They may also change what becomes visible instead of changing the underlying conduct.

Suppose an additional procedure applies above a particular threshold. Participants may reorganise transactions to remain below it. If success is judged through one performance measure, they may optimise the measure rather than the wider purpose.

Such responses are not always dishonest. Choosing another authorised route may be a reasonable adaptation to changed conditions. What matters is that the rule has redirected behaviour, even if it has not produced its intended outcome.

This is why superficial compliance can be misleading. A rule may strongly affect action while shifting attention toward technical requirements, concealment or substitutes.

Noncompliance does not prove that the rule had no effect. It may reveal that the rule made another response comparatively easier.

Rules can change how a situation is understood

Rules can affect more than burdens and consequences. They can change how participants interpret the situation, which in turn changes the obligations or costs they perceive.

In one field experiment, several day-care centres introduced a small fine for parents who arrived late to collect their children. Lateness increased rather than decreased.

The finding does not show that fines generally increase the behaviour they target. Nor does it establish one certain psychological explanation. One possibility is that the fine changed how some parents interpreted lateness: what had felt like a social obligation may have begun to resemble a service available for a price.

The formal rule interacted with an informal understanding.

Changed meaning is not identical to changed cost. But when a rule changes whether conduct feels like a violation, transaction, entitlement or obligation, it can alter which consequences people recognise and which responses seem acceptable.

A rule can therefore change both the external conditions of action and the way those conditions are understood.

Changing the rule may not immediately change the pattern

Formal rules can change faster than the expectations and practices built around them.

A requirement may be removed while participants continue following the old procedure because they do not know it has changed, expect others to preserve it or still encounter the old implementation.

The reverse can also happen. Informal enforcement may weaken before the official rule changes. Repeated exceptions can become accepted, or participants may find an alternative route that makes the formal requirement less consequential.

Formal and informal rules can reinforce each other, conflict or change at different speeds.

Removing a rule therefore does not guarantee an immediate return to earlier behaviour. Learned expectations and implementation practices may persist. But persistence is not inevitable: clear and consistently implemented changes can sometimes alter conduct quickly.

Changing the stated rule and changing the practical conditions of action are related but distinct events.

Rules change conditions, not certainty

Return to the person facing the additional approval.

The rule changed what proceeding required. Acting now involved effort, waiting, uncertainty and dependence on another person. Delay removed the immediate burden but postponed the intended outcome. Another route might require compromise. Abandoning the process would remove the requirement while sacrificing the goal.

Different people could encounter that rule and respond differently because they possess different information, capacities, alternatives and expectations.

Rules can raise costs, lower them or shift them elsewhere. They can clarify action, restrict access, attach consequences and redistribute burdens. They can also invite adaptation and produce outcomes that differ from their stated purpose.

Behaviour alone therefore cannot tell us whether someone agreed with the rule or preferred what followed.

Rules change the conditions of choice.

They do not mechanically choose the behaviour.