1. William J. Stuntz, Christian Legal Theory, 116 Harv. L. Rev. 1701, 1747 (2003) (reviewing Christian Perspectives on Legal Thought (Michael W. McConnell et al. eds., 2001)).

2. 1 Nat’l Aeronautics & Space Admin., Report of the Columbia Accident Investigation Board 200 (2003), available at http://anon.nasa-global.speedera.net/anon.nasa-global/CAIB/CAIB_lowres_full.pdf.

3. See Robert Frank, The Gang’s All Here: ’90s Highfliers Bring Day of Chaos to Courts, Wall St. J., Mar. 3, 2004, at A1.

4. Donald C. Langevoort, The Regulators and the Financial Scandals, in Restoring Trust in American Business 63, 68 (Jay W. Lorsch et al. eds., 2005) (hereinafter “Lorsch”) (“[W]hat many people have said in the aftermath of the scandals is true: everything that was seriously wrong violated existing rules or principles, so that the problem was not that the disclosure regime was filled with large holes.”).

5. Rules must still be applied to particular situations, of course, which entails judgment and discretion. As discussed in this article, however, rules affect how these decisions are made and implemented.

6. “Rule,” when used in this article, refers to statutes, regulations, and other prescriptions promulgated by governing bodies applicable to everyone subject to their authority. Excluded are “rules of nature,” “rules of thumb,” and ad hoc directives to fewer than all similarly situated individuals.

7. Sarbanes Oxley Act of 2002, Pub. L. No. 107-204, 116 Stat. 745 (codified in scattered sections of the United States Code, principally Title 15) (hereinafter “Sarbanes-Oxley”).

8. See Nat’l Ass’n of Securities Dealers, Manual Rule 4350 (2003); New York Stock Exchange, Listed Company Manual § 303A (2003).

9. See Kris Maher, Sarbanes-Oxley Is Boon for Slew of Consultants, Wall St. J., Aug. 19, 2003, at B1.

10. Telephone Interview with Edward S. Petry, Executive Director, Ethics and Compliance Officer Ass’n (Sept. 6, 2004).

11. See U.S. Sentencing Guidelines Manual § 8B2.1(a)(2) (2005), available at http://www.ussc.gov/2005guid/gl2005.pdf. In U.S. v. Booker, 543 U.S. 220 (2005), the Supreme Court invalidated a statute that permitted judges to depart from sentencing ranges on the basis of facts not pled to or found by a jury. Whereas the Court’s concern was with aggravating circumstances (id. at 244), a “compliance and ethics program” is a mitigating factor. Moreover, the Guidelines, while no longer mandatory, do have an advisory function (id. at 246). A “compliance and ethics program,” therefore, remains relevant for both judges and business managers.

12. See Richard C. Breeden, Restoring Trust: Report to The Hon. Jed S. Rakoff on Corporate Governance for the Future of MCI 110 (2003), available at http://www.nysd.uscourts.gov/rulings/02cv4963_082603.pdf.

13. See Linda Klebe Treviño et al., Managing Ethics and Legal Compliance: What Works and What Hurts, 41 Cal. Mgmt. Rev. 131, 146 (1999). See also Scott J. Reynolds & Norman E. Bowie, A Kantian Perspective on the Characteristics of Ethics Programs, 14 Bus. Ethics Q. 275, 286 (2004) (hereinafter “Reynolds & Bowie”).

14. See U.S. Sentencing Guidelines Manual § 8B2.1(a)(2) cmt n.1 (2005), available at http://www.ussc.gov/2005guid/gl2005.pdf. The point here is not that the Sentencing Guidelines should extend to legal-but-unethical conduct, but simply that regulatory references to ethics remain largely limited to legal rather than ethical considerations.

15. See Lynn Sharp Paine, Managing for Organizational Integrity, Harv. Bus. R., Mar.–Apr. 1994, at 106, 109 (hereinafter “Paine”) (“‘If it’s legal, it’s ethical,’ is a frequently heard slogan. But conduct that is lawful may be highly problematic from an ethical point of view.”). See also William H. Widen, Enron at the Margin, 58 Bus. Law. 961, 999 (2003).

16. See Blake E. Ashforth & Vikas Anand, The Normalization of Corruption in Organizations, 25 Research in Org. Behavior 1, 18 (2003) (citation omitted).

17. See Erik Portanger, Banned on Wall Street, But All Right Abroad? Wall St. J., June 6, 2003, at C1.

18. See, e.g., Rakesh Khurana et al., Management as a Profession, in Lorsch, supra note 4, at 43, 44.

19. Eugene Bardach & Robert A. Kagan, Going By the Book: The Problem of Regulatory Unreasonableness 100 (2d ed. 2002) (hereinafter “Bardach & Kagan”).

20. See Diane Vaughan, Toward Understanding Unlawful Organizational Behavior, 80 Mich. L. Rev. 1377, 1398–99 (1982).

21. For a discussion of differences between moral and legal rules, see Steven Shavell, Law versus Morality as Regulators of Conduct, 4 Am. L. & Eco. Rev. 227, 229–32 (2002) (hereinafter “Shavell”).

22. Frederick Schauer, The Convergence of Rules and Standards, 2003 N.Z. L. Rev. 303, 312.

23. See id. at 309.

24. The extremes of the continuum have also been identified as “hypernorms” and moral rules, with moral principles—that are justified by the former and that generate the latter—lying in between. See Edward Soule, Managerial Moral Strategies—In Search of a Few Good Principles, 27 Acad. Mgmt. Rev. 114, 120 (2002). Thus, even apart from any convergence, different definitions of “principle” in the literature (and different views of the relationship between principles and narrower and broader concepts) create challenges for comparing principles and rules. Because this analysis is not essential to the issue under examination, such a comparison will not be pursued here.

25. See Shavell, supra note 21, at 254–55.

26. This section relies heavily on Frederick Schauer, Playing by the Rules: A Philosophical Examination of Rule-Based Decision-Making in Law and in Life (1991) (hereinafter “Playing by the Rules”). See also Julia Black, Rules and Regulators 6–19 (1997) (hereinafter “Black”).

27. Sarbanes-Oxley Act of 2002 § 406(a), 15 U.S.C. § 7264(a) (Supp. III 2003).

28. Id.

29. See, e.g., Kimberly D. Krawiek, Cosmetic Compliance and the Failure of Negotiated Governance, 81 Wash. U. L. Q. 487, 511–12 (2003).

30. See Disclosure Required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002, Securities Act Release No. 33-8177, [2002–2003 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 86,818 at 86,883 (Jan. 23, 2003), at § II.B.2.b, available at http://www.sec.gov/rules/final/33-8177.htm (hereinafter “SEC Code of Ethics Release”).

31. See Comments on Proposed Rule: Disclosure Required by Sections 404, 406 and 407 of the Sarbanes-Oxley Act of 2002, http://www.sec.gov/rules/proposed/s74002.shtml.

32. See Margaret Jane Radin, Presumptive Positivism and Trivial Cases, 14 Harv. J. L. & Pub. Pol’y 823, 826 (1991).

33. See Larry Alexander & Emily Sherwin, The Rule of Rules: Morality, Rules, and the Dilemmas of Law 54 (2001) (hereinafter Alexander & Sherwin”).

34. See Playing by the Rules, supra note 26, at 53.

35. Indeed, the SEC added the principal executive officer to the group subject to the code, and required that two additional ethical issues (internal reporting of code violations and accountability for adherence to the code) be covered by the code. Compare Sarbanes-Oxley Act of 2002 § 406(a), 15 U.S.C. § 7264(a) (Supp. III 2003), with SEC Code of Ethics Release, supra note 30, §§ II.B.1.b, II.B.2.c.

36. Playing by the Rules, supra note 26, at 229–30. See also Alexander & Sherwin, supra note 33, at 67.

37. See Linda Meyer, “Nothing We Say Matters”: Teague and New Rules, 61 U. Chi. L. Rev. 423, 481 (1994) (“Although the resulting decisions are not perfect, they are better than they would be if the time-pressed, incapable, or untrustworthy decision maker had tried to take all relevant features into account.”).

38. It might seem that a rule is also over-inclusive when it appears to prohibit conduct that is consistent with its purpose. Yet, an act that furthers an ethical purpose more than compliance would (e.g., speeding to take an injured passenger to an emergency room) is generally subject to a justification or excuse defense. See, e.g., Mitchell N. Berman, Justification and Excuse, Law and Morality, 53 Duke L. J. 1, 18–20 (2003). Even the rules governing these defenses exhibit the limitations of rules, however. While they set forth the showing that must be made (and, thereby, eliminate other factors from consideration), they cannot anticipate all justifiable or excusable circumstances, and leave it to the individual to determine and establish that he or she satisfied the applicable standard.

39. See, e.g., Felix G. Rohatyn, The Financial Scandals and the Demise of the Traditional Investment Banker, in Lorsch, supra note 4, at 135, 136 (“When it comes to underwriting securities and protecting the public, the requirement of ‘full disclosure’ has been superseded by disclosure so massive and detailed that no one but specialists can begin to understand the facts.”).

40. Black, supra note 26, at 8.

41. See Playing by the Rules, supra note 26, at 50. See also Colin S. Diver, The Optimal Precision of Administrative Rules, 93 Yale L. J. 65, 70–71 (1983). The over- and under-inclusiveness that inheres in rules is to be distinguished from the incompleteness that is sometimes deliberately “written into” a rule for reasons of strategy or cost. See Dan M. Kahan, Ignorance of Law Is an Excuse—But Only for the Virtuous, 96 Mich. L Rev. 127, 139 (1997).

42. SEC Code of Ethics Release, supra note 30, § II.B.1.b.

43. A number of models have been developed to describe how we make and implement ethical decisions. See Thomas M. Jones, Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model, 16 Acad. Mgmt. Rev. 366, 368–72 (1991) (hereinafter “Jones”). This discussion uses the “four component” model developed by James R. Rest (see James R. Rest, Morality, in III Handbook of Child Psychology 556, 558–69 (Paul H. Mussen ed., 4th ed. 1983)) because of its relative simplicity and its having served as the basis of still other models (see Jones, supra, at 368–72), but acknowledges that the model has not been free from criticism (see, e.g., Gary R. Weaver & Bradley R. Agle, Religiosity and Ethical Behavior in Organizations: A Symbolic Interactionist Perspective, 27 Acad. Mgmt. Rev. 77, 82 (2002)).

44. See Walt Bogdanich & Eric Koli, 2 Paths of Bayer Drug in 80’s: Riskier One Steered Overseas, N.Y. Times, May 23, 2003, at A1. See also David M. Messick & Max H. Bazerman, Ethical Leadership and the Psychology of Decision Making, 37 Sloan Mgmt. Rev. 9, 15–16 (1996).

45. See Dan Baum, The Price of Valor, New Yorker, July 12 & 19, 2004, at 44, 46.

46. See Stanley Milgram, Obedience to Authority: An Experimental View 32–43 (1974) (hereinafter “Milgram”).

47. See Joshua Greene et al., An fMRI Investigation of Emotional Engagement in Moral Judgment, 293 Science 2105 (2001). A personal dilemma would include such situations as throwing someone from a lifeboat; an impersonal one would include scenarios such as finding someone’s lost wallet.

48. Joshua Greene, From neural “is” to moral “ought”: what are the moral implications of neuroscientific moral psychology? 4 Neuroscience 847, 849 (2003).

49. See, e.g., Ben Hamilton-Baillie, Urban Design: Why Don’t We Do It in the Road? Modifying Traffic Behavior through Legible Urban Design, 11 J. Urban Tech. 43, 55 (2004) (hereinafter “Hamilton-Baillie”) (“Many measures intended to improve safety have the effect of divorcing the driver from the need to interact with people and with their surroundings.”). See also discussion accompanying notes 54, 55.

50. Sim B. Sitkin & Nancy L. Roth, Explaining the Limited Effectiveness of Legalistic “Remedies” for Trust/Distrust, 4 Org. Sci. 367, 376 (1993) (citation omitted).

51. Cf. John G. Kemeny et al., Report of the President’s Commission on the Accident at Three Mile Island 9 (1979), available at http://www/pddoc.com/tmi2/kemeny/attitudes_and_practices.htm (“[R]egulations alone cannot assure safety. Indeed, once regulations become as voluminous and complex as those regulations now in place, they can serve as a negative factor in nuclear safety.… The satisfaction of regulatory requirements is equated with safety.”).

52. See Marc D. Street et al., The Impact of Cognitive Expenditure on the Ethical Decision-Making Process: The Cognitive Elaboration Model, 86 Org. Behavior and Human Decision Processes 256, 270 (2001) (“[I]t is not overly cynical to assert that many individuals make decisions on the basis of how the outcomes affect themselves while simultaneously giving little regard to how they impact others.”).

53. Admittedly, rules may universalize: everyone must obey the speed limit, not only me and the driver next to me. This is not inconsistent with the narrowing tendency of rules since the universalizing and the narrowing occur in different contexts; I am not called upon to make ethical decisions with respect to those who drive on highways the day after I do, or who drive at the same time but on the other side of the state.

54. Sarah Lyall, A Path to Road Safety With No Signposts, N.Y. Times, Jan. 22, 2005, at A4 (hereinafter “Lyall”). See also Hamilton-Baillie, supra note 49, at 56.

55. Lyall, supra note 54. See also Malcolm Gladwell, Blowup, New Yorker, Jan. 22, 1996, at 32, 36 (“Why are more pedestrians killed crossing the street at marked crosswalks than at unmarked crosswalks? Because they compensate for the ‘safe’ environment of a marked crossing by being less vigilant about oncoming traffic.”).

56. See PricewaterhouseCoopers & Economist Intelligence Unit, Governance: From Compliance to Strategic Advantage 3 (2004), http://www.pwc.com/images/gx/eng/fs/0404eiugov.pdf.

57. Ann E. Tenbrunsel & David M. Messick, Sanctioning Systems, Decision Frames, and Cooperation, 44 Admin. Sci. Q. 684 (1999).

58. Id. at 697–98.

59. See Tom R. Tyler & John M. Darley, Building a Law-Abiding Society: Taking Public Views About Morality and the Legitimacy of Legal Authorities Into Account When Formulating Substantive Law, 28 Hofstra L. Rev. 707, 716 (2000).

60. See Owen D. Jones & Timothy H. Goldsmith, Law and Behavioral Biology, 105 Colum. L. Rev. 405, 499 (2005); Playing by the Rules, supra note 26, at 104.

61. The concern here is less how much choice (and freedom to violate the rule) the decision-maker actually has in the face of the rule, and more the degree of choice and freedom that the decision-maker feels that he or she has. Cf. Playing by the Rules, supra note 26, at 9 (“A rule giving the addressee a choice whether to comply or not but rewarding compliance with payment of one million dollars is a rule in which the formal option is in practice unavailable.” (footnote omitted)).

62. See Jonathan Haidt, The Emotional Dog and Its Rational Tail: A Social Intuitionist Approach to Moral Judgment, 108 Psych. Rev. 814, 818 (2001) (hereinafter “Haidt”).

63. See, e.g., Lawrence Kohlberg, Moral Stages and Moralization: The Cognitive-Developmental Approach, in Moral Development and Behavior: Theory, Research, and Social Issues 31 (Thomas Lickona ed., 1976) (hereinafter “Kohlberg/Lickona”).

64. Haidt, supra note 62, at 818.

65. Id. at 828–29. This view is consistent with the emerging awareness that the thought process in which human beings engage generally (not only about ethical issues) functions on dual levels—one that “is rapid, intuitive, but sometimes error-prone [and another that] is slower, reflective, and more statistical.” Cass R. Sunstein, Hazardous Heuristics, 70 U. Chi. L. Rev. 751, 754 (2003) (reviewing Heuristics and Biases: The Psychology of Intuitive Judgment (Thomas Gilovich et al. eds., 2002)) (hereinafter “Sunstein, Hazardous Heuristics”). See also Antonio Domasio, Descartes’ Error: Emotion, Reason, and the Human Brain 189 (1994).

66. Kohlberg/Lickona, supra note 63, at 49.

67. Haidt, supra note 62, at 829.

68. Id. (citations omitted).

69. See, e.g., Thomas R. Piper et al., Can Ethics be Taught? Perspectives, Challenges, and Approaches at Harvard Business School 52 (1993).

70. Bardach & Kagan, supra note 19, at 100.

71. Paine, supra note 15, at 111.

72. See generally Sharon S. Brehm & Jack W. Brehm, Psychological Reactance: A Theory of Freedom and Control (1981). See also Irving L. Janis & Leon Mann, Decision Making: A Psychological Analysis of Conflict, Choice, and Commitment 256–58 (1977); Robert A. Kagan & John T. Scholz, The “Criminology of the Corporation” and Regulatory Enforcement Strategies, in Enforcing Regulation 67, 73–74 (Keith Hawkins & John M. Thomas eds., 1984) (hereinafter “Kagan & Scholz”).

73. See Ruth C. Engs & David J. Hanson, Reactance Theory: A Test With Collegiate Drinking, 64 Psych. Rep. 1083 (1989).

74. See Michael B. Mazis, Antipollution Measures and Psychological Reactance Theory: A Field Experiment, 31 J. Personality & Soc. Psych. 654, 657 (1975).

75. G. Daniel Lassiter, Effect of Superfluous Deterrence on the Perception of Others, 22 J. Experimental Soc. Psych. 163 (1986) (hereinafter “Lassiter”). See also Timothy F. Malloy, Regulation, Compliance and the Firm, 76 Temp. L. Rev. 451, 522 (2003) (hereinafter “Malloy”).

76. See, e.g., Edward L. Deci et al., A Meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards on Intrinsic Motivation, 125 Psych. Bull. 627, 630 (1999).

77. See, e.g., Teresa M. Amabile et al., Effects of Externally Imposed Deadlines on Subsequent Intrinsic Motivation, 34 J. Personality and Soc. Psych. 92 (1976).

78. See Timothy D. Wilson & G. Daniel Lassiter, Increasing Intrinsic Interest With Superfluous Extrinsic Constraints, 42 J. Personality and Soc. Psych. 811, 812 (1982) (hereinafter “Wilson & Lassiter”).

79. See Bruno S. Frey, Not Just for the Money: An Economic Theory of Personal Motivation 30 (1997) (hereinafter “Frey”).

80. See Wilson & Lassiter, supra note 78; Lassiter, supra note 75.

81. Wilson & Lassiter, supra note 78, at 817.

82. Robert B. Cialdini, Social Influence and the Triple Tumor Structure of Organizational Dishonesty, in Codes of Conduct: Behavioral Research into Business Ethics 44, 57 (David M. Messick & Ann E. Tenbrunsel eds., 1996) (hereinafter “Cialdini”). See also Lassiter, supra note 75, at 172.

83. See Cialdini, supra note 82, at 57; John Braithwaite, Rewards and Regulation, 29 J. Law & Soc’y, 12, 16 (2002); Mark R. Lepper, Social-Control Processes and the Internalization of Social Values: An Attributional Perspective, in Social Cognition and Social Development: A Sociocultural Perspective 294, 297 (E. Tory Higgins et al. eds., 1983).

84. See Frey, supra note 79, at 16.

85. See Ian Ayres & John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate 49 (1992) (“[T]he less salient and powerful the control technique used to secure compliance, the more likely that internalization will result.” (citations omitted)).

86. See Malloy, supra note 75, at 487.

87. Cialdini, supra note 82, at 51. See also Maurice E. Schweitzer et al., Goal Setting as a Motivator of Unethical Behavior, 47 Acad. Mgmt. J. 422 (2004).

88. See, e.g., Linda Klebe Treviño & Gary R. Weaver, Managing Ethics in Business Organizations 174–81 (2003).

89. See, e.g., Christopher Stone, Where the Law Ends: The Social Control of Corporate Behavior 101 (1975) (“The very creation of a huge, cumbersome network of rules may make those subject to them abdicate their independent responsible judgment.…”).

90. Cass R. Sunstein, Problems With Rules, 83 Cal. L. Rev. 953, 995 (1995).

91. Joshua D. Margolis, Psychological Pragmatism and the Imperative of Aims: A New Approach for Business Ethics, 8 Bus. Ethics Q. 409, 413 (1998) (citations omitted). See also Karl E. Weick, Making Sense of the Organization 110 (2001); Kagan & Scholz, supra note 72, at 82 (citation omitted).

92. Shavell, supra note 21, at 236.

93. See, e.g., Playing by the Rules, supra note 26, at 153.

94. See Note, The Good, the Bad, and Their Corporate Codes of Ethics: Enron, Sarbanes-Oxley, and the Problems With Legislating Good Behavior, 116 Harv. L. Rev. 2123, 2137–40 (2003) (hereinafter “The Good, the Bad, and Their Corporate Codes of Ethics”).

95. See id.

96. See SEC Code of Ethics Release, supra note 30, § II.B2.c.

97. See U.S. Sentencing Guidelines Manual § 8B2.1(a)(2) (2005), available at http://www.ussc.gov/2005guid/gl2005.pdf.

98. See Shavell, supra note 21, at 228 (“[L]aw and morality work together to control a vast range of behavior; notably, most crimes and torts are not only legally sanctionable but are also thought immoral, and often so are breaches of contracts and violations of regulation.”).

99. See generally Thane Rosenbaum, The Myth of Moral Justice: Why Our Legal System Fails to Do What’s Right 246–57 (2004).

100. Several states in the United States have enacted duty-to-rescue statutes under which those who fail to aid someone in distress may be criminally liable. Generally, these have not been invoked or tested, but in many other countries, such a direct approach is an accepted part of the culture. See id. at 248.

101. Sarbanes-Oxley Act of 2002 § 806(a), 18 U.S.C. § 1514A (Supp. III 2003).

102. Sarbanes-Oxley Act of 2002 § 302, 15 U.S.C. § 7241 (Supp. III 2003); Sarbanes-Oxley Act of 2002 § 906, 18 U.S.C. § 1350 (Supp. III 2003).

103. See The Good, the Bad, and their Corporate Codes of Conduct, supra note 94, at 2132.

104. SEC Release No. 34-35341 at 9 (Feb. 8, 1995), http://www.sec.gov/rules/final/nadce.txt.

105. See Securities Industry/Regulatory Council on Continuing Education, Firm Element Advisory 9 (2005), available at http://www.securitiescep.com/FirmElements/posting/00002341.pdf.

106. Reynolds & Bowie, supra note 13, at 287.

107. Id. See also Ronald R. Sims, Ethics and Organizational Decision Making: A Call for Renewal 148–49 (1994).

108. See Joseph L Badaracco, Jr., Defining Moments: When Managers Must Decide Between Right and Right 6–7 (1997).

109. See generally Milgram, supra note 46.

110. See generally Sunstein, Hazardous Heuristics, supra note 65.

111. See, e.g., Amos Tversky & Daniel Kahneman, Judgment Under Uncertainty: Heuristics and Biases, in Judgment and Decision Making: An Interdisciplinary Reader 38, 46–49 (Hal R. Arkes & Kenneth R. Hammond eds., 1986).

112. See Reynolds & Bowie, supra note 13, at 287.

113. See Solomon E. Asch, Opinions and Social Pressure, 193 Sci. Am. 31 (1955).

114. Confucius, Confucian Analects, the Great Learning and the Doctrine of Man 146 (James Legge trans., Dover Publications 1971) (1893).