Legal Realism for Economists
نویسنده
چکیده
M ost economic theory presumes—often implicitly—a system of law and adjudication. After all, institutions like property, contract, and government regulation typically entail mechanisms for law-creation and lawapplication, which usually (though perhaps not inevitably) imply some kind of judicial system (Posner, 2008, pp. 5–6). Because judges are often responsible for interpreting and enforcing the “rules of the game,” they are significant economic policymakers. Consider five out of many possible illustrations: First, the scope of contract rights is determined, in large measure, by judicial decisions, and judges sometimes refuse to enforce the terms of a contract as written because they view the contract as substantively unconscionable or because they discern flaws in the bargaining process. For example, in recent years many judges have demonstrated hostility to arbitration clauses in employment contracts, which in turn affects the labor market (Burton, 2006). Second, the allocation of the social costs of various economic activities has economic consequences both for distribution and, if transaction costs are nontrivial, for efficiency (Coase, 1960; Calabresi and Malamed, 1972). Courts are often responsible for making these allocations. For example, judicial decisions may determine whether landowners are liable for injuries that result from activities that take place on their property, and, if so, whether such liability shall be strict (that is, without regard to fault) or based only on negligence (Shugerman, 2000). These judicial decisions, in turn, may have significant consequences for owners’ land-use decisions, as well as the location and activity choices of potential victims (Shavell, 1980). Third, even when the risks associated with particular economic activities are addressed principally through regulation rather than litigation, judges
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