Economic Models of Law

Author(s):  
Thomas J. Miceli

This article discusses the use of economic models for understanding law. It begins by describing the nature of economic models in general, and then turns to the specific application of economic models to law. It distinguishes between ‘economic analysis of law’, which concerns the use of economic theory for describing the incentive effects of legal rules (positive analysis) and for prescribing better rules (normative analysis); and ‘law and economics’, which concerns the relationship between law and markets as alternative institutions for organizing economic activity. The article concludes with some comments on the actual process of building economic models of law.

Author(s):  
Florian Faust

This chapter discusses the relationship between comparative law and economic analysis of law. After providing an overview of the characteristics of the economic analysis of law, it explains how one of the two disciplines can operate as an ancillary discipline to the other; this has been termed ‘Comparative Law and Economics’. The next section describes how comparative law and economic analysis of law can be brought together by making one discipline the subject matter of the other. It suggests that the role of economic analysis of law may be greater in case law systems than in codified systems and that this role may vary according to the subject of legislation. The section concludes with considerations on the role comparative law plays and should play in different contexts. Finally, it is argued that comparative law and economics should not be considered a discipline on its own.


Author(s):  
Brian H. Bix

Coase’s work reshaped the economic analysis of law and government policy, and began the law-and-economics movement. His writings, over the course of decades, have consistently emphasized the importance to clear economic thinking of observing actual practice. While economic theory had often been grounded on abstract models that assumed the absence of any costs for commercial transactions, Coase has shown how recognizing the pervasive presence of frequently substantial transaction costs in the real world requires rethinking established economic ideas about industrial organization and government regulation.


2022 ◽  
pp. 205556362110616
Author(s):  
Katri Nousiainen

We need law and economics to do the scientific measurement necessary for legal design to be seen as on the stage of science. Law and economics—which is the application of economic theory, especially microeconomic theory, to the analysis and the practice of law--is a valid tool and approach to reflect on what should be empirically investigated in the practice of legal design. The neoclassical (mainstream) theoretical foundation of economic analysis of law is, however, at times far from reality as it often predicts uncooperative and even selfish behaviour. In real life people do cooperate, have empathy, emotions and even behave in an altruistic way. For those reasons, behavioural law and economics and conventional wisdom are needed to complement the teachings from standard theory in the field of commercial contracting.


Author(s):  
Eyal Zamir ◽  
Doron Teichman

In the past few decades, economic analysis of law has been challenged by a growing body of experimental and empirical studies that attest to prevalent and systematic deviations from the assumptions of economic rationality. While the findings on bounded rationality and heuristics and biases were initially perceived as antithetical to standard economic and legal-economic analysis, over time they have been largely integrated into mainstream economic analysis, including economic analysis of law. Moreover, the impact of behavioral insights has long since transcended purely economic analysis of law: in recent years, the behavioral movement has become one of the most influential developments in legal scholarship in general. Behavioral Law and Economics offers a state-of-the-art overview of the field. The book surveys the entire body of psychological research underpinning behavioral analysis of law, and critically evaluates the core methodological questions of this area of research. The book then discusses the fundamental normative questions stemming from the psychological findings on bounded rationality, and explores their implications for establishing the aims of legislation, and the means of attaining them. This is followed by a systematic and critical examination of the contributions of behavioral studies to all major fields of law—property, contracts, consumer protection, torts, corporate, securities regulation, antitrust, administrative, constitutional, international, criminal, and evidence law—as well as to the behavior of key players in the legal arena: litigants and judicial decision-makers.


Global Jurist ◽  
2019 ◽  
Vol 19 (3) ◽  
Author(s):  
Guido Calabresi

Abstract This is the first chapter of The Future of Law and Economics: Essays in Reform and Recollection by Guido Calabresi, first published by Yale University Press in 2016.


Global Jurist ◽  
2019 ◽  
Vol 19 (3) ◽  
Author(s):  
Paolo Silvestri

Abstract Taking as its starting-point Guido Calabresi’s latest book – The Future of Law and Economics – the present article aims to explore the often neglected issue of value judgments and normativity in Law and Economics. I will show the importance of enquiring Calabresi’s methodological distinction between Law and Economics and Economic Analysis of Law and the related bilateralism thesis in order to understand the problematic relationship between methodological value judgments and ethical value judgments, the ‘distance’ between Calabresi and Posner and the problematic notion of reformism. Then I will try to introduce a different notion of normativity. I will also show the existence of an unresolved tension in Calabresi’s methodological discourse between a positive approach, which seems to be privileged in this book, and his insistence on the inevitability of value judgments in economic analysis. Finally, I clarify the reasons for the ‘ignorance’ of values by the economist by distinguishing between economists’ “lack of self-awareness”, economists’ idolatry and the economists’ lenses.


2007 ◽  
Vol 9 (2) ◽  
pp. 127-168 ◽  
Author(s):  
Michael G. Faure

This paper deals with possible compensation mechanisms for damage caused by occupational diseases. Specific attention is paid to the potential influence of these compensation mechanisms on prevention of work related incidents. The economic analysis of law is used to pay attention to liability and liability insurance whereby both the preventive effects of liability and liability insurance are discussed as well as their capacity to compensate. Attention is equally paid to social security, compensation funds and first party as well as direct insurance schemes. Some empirical evidence concerning the effectiveness of various compensation mechanisms as far as the prevention of occupational diseases is concerned is also discussed.


2020 ◽  
Vol 27 (1) ◽  
pp. 262-286
Author(s):  
Tamara Tkach ◽  
Anatoliy Tkach ◽  
Ivan Rekun

Introduction. The article is devoted to the issues of multidisciplinary interaction in new scientific fields, which involve a wide variety of convergences, no matter how strange at first glance they may seem. One of these phenomena is the interaction of psycholinguistics and neuroeconomics. The goal. The article examines the transition of modern science to multidisciplinary discourse, which makes it necessary to conceptualize and possibly operationalize methods of psycholinguistics. The conceptualization of new areas of neuroeconomics, in a psycholinguistic context, presupposes a certain mental experience that includes, in addition to the processes of creating new concepts and contextual economic knowledge, also defining the role of interests, intentions, emotions in human economic activity. Methods. Multivariate analysis, comparative analysis, extrapolation. Results. It is proved that in recent decades the development of new areas of economic science, namely those related to the development of neuroeconomics, has significantly expanded the field of psycholinguistics. The production of new paradigms of economic theory, the formation of the corresponding definitions, objects requires the design and definition of them both in form and in content. It considers the need for a theoretical and orderly definition of the functional meaning of the psycholinguistic context of new definitions, the result of which can be a conceptual system for communication between specialists in various fields of science at the level of their professional understanding. It seems that the central issues in the psycholinguistic discourse of neuroeconomics have become the relationship between economics, psychology, linguistics and psycholinguistics. Such connection is undoubtedly of a multidisciplinary nature, which contributes to the deepening of the relationship between scientific thought, culture and language and became the impetus for understanding the nature of human cognition at a higher, multidisciplinary level of development of science. This is a necessary component for understanding the meanings and structure of concepts, terms and definitions, as well as communications at a higher scientific level. Conclusions. It is concluded that new areas of neuroeconomics such as behavioral economics, behavioral finance, emotional economics, psychological economics, have become areas of economic theory that, explicitly or implicitly, take into account the psychological characteristics of human perception and behavior in the process of economic activity. These definitions catalyze the theoretical integration of various scientific fields, and, above all, psycholinguistic science.


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