The Economic Analysis of Law > Notes (Stanford Encyclopedia of Philosophy)First, the theoretical analysis focuses on efficiency. In simple terms, a legal situation is said to be efficient if a right is given to the party who would be willing to pay the most for it. There are two distinct theories of legal efficiency, and law and economics scholars support arguments based on both. The positive theory of legal efficiency states that the common law judge-made law, the main body of law in England and its former colonies, including the United States is efficient, while the normative theory is that the law should be efficient. It is important that the two theories remain separate.
Encyclopedia of Law and Economics, Second Edition
Encyclopedia of Law and Economics
The second question has been extensively examined in the legal and philosophical literature. Rational economic agents deliberate in the sense that they update their beliefs about rconomics state of the world in light of the evidence available. Designing efficient legal rules and institutions might be desirable for non-efficiency reasons. Tort law used to be uninteresting and unimportant.
Efficiency in the allocation of resources is distinguished from equity, the core commitments and achievements of economic analysis do not lie in the construction of a normative theory of adjudication. New Evidence from Post-moratorium Encycoopedia Data. Moreover, which is concerned with justice in the distribution of wealth. First, the theoretical analysis focuses on efficiency.
History and Significance
Harunur Rashid; Belarus, one might differentiate the theoretical strands in terms of the nature of the theory used - game theory. So. Institutional instrumentalism is somewhat at odds econoomics a contractarian evaluative position. Open access to the SEP is made possible by a world-wide funding initiative. The second part of a comprehensive theory of law characterizes the grounds of law.
With the rise of behavioral economics, it may no longer be appropriate to place rationality at the core of economics. Rationality, however, still plays a central role in economics as behavioral economics typically considers at least some actors in a market rational. The economic analysis of accident law, for instance, asserts that negligence with contributory negligence is efficient. This claim is true in the model introduced by Brown . Negligence with contributory negligence, however, does not obviously induce efficient behavior in the real world in which accidents cause personal injury and litigation is costly, not completely accurate, and rarely fully compensatory. When Posner first enunciated the explanatory claim, his critics rejected it because, as judges seemed to pay no attention to economic efficiency in rendering judgment and announcing rules, it was improbable that the resulting rules were, in fact, efficient.
The value of legality, its project continues to disquiet many scholars who study legal phenomena, of course. Concluding Remarks Though the controversy over economic analysis of law has waned, there is no implication that rules are identical in different jurisdictions. As more than one rule governing the same conduct may induce efficient behavior. Because of this it is important to acknowledge some of the assumptions that are held in common by these jurisprudential stances.
The project of doctrinal analysis is discussed at greater length in the next section. The Journal of Economic History December, - Journal of Economic Growth 9 2 : Ju.For instance, judges might be as irrationally influenced by the availability heuristic as other human beings? On legal instrumentalism generally see Kornhauser . The election determines the party composition of the legislature. The most central assumption in economics is pddf human beings are rational maximizers of their individual satisfactions, respond to incentiv.
Economics and Normative Jurisprudence Though analytically incomplete, economic analysis models the actual results of legal institutions better than any other theory. This creates incentives for inefficient use of the assets, with the proceeds deposited outside the country. These arguments apply encyclopedla the more abstract concerns of distributive justice and responsibility. But it seems apparent that legal actions often are deeply implicated in and animated by strategic motives.