Evolutionary Law and Economics

This article examines the use of evolutionary theories in law and economics. It begins with a discussion of the concept of evolution. It then explains the central ideas of three central evolutionary approaches in law and economics: the neo-institutional approach, microeconomic models, and the idea of competing jurisdictions. Neo-institutionalist approaches provide a bouquet of arguments which may be used to explain the evolution of law. Microeconomic approaches driven by demand for, and supply of legal rules as well as their interactions with social norms and technological evolution may provide such models, but, since these models are based on Markov processes and thus on stochasticity, they may only describe and predict expected values of legal change. As a consequence, explanations of specific legal variations cannot be traced back to specific elements of these evolutionary theories in law and economics. This caveat persists even if one would extend the models to allow for co-evolution of jurisdictions partly driven by comparative lawyers' research. Nevertheless, the said microeconomic approaches may still be useful for normative evaluations of differences in the law: If the frameworks of legal evolution in jurisdictions differ, the theory may offer arguments for why the evolution in one or the other will tend towards a more desirable outcome (for example efficiency). One should however always be aware that these theories can only make statements on tendencies of evolution, not on specific legal changes. The same caveats apply in an even stronger way to the use of (evolutionary) theories of inter-jurisdictional competition.