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Abstract:
Recently, the positive theory of rational choice has come under attack from experimental psychologists and economists. Their experimental results, gathered together under the banner of behavioral analysis, show that the maximizing model of rational choice often does not provide a very accurate account of how agents actually choose. Moreover, the departures from the model appear systematic rather than random, suggesting that something other than maximization is going on. However, the general tenor of these studies is not to question the normative ideal of maximization. Rather, the departures from the standard account of rational choice are typically characterized, and criticized, as failures to be rational. Agents are only human beings, after all, and human beings are subject to the limitations that must, inevitably and systematically, arise out of personal bias, limits on the salience and availability of important information, and the distorting effects of how a given problem is framed. Thus, real world agents are only, it is said, capable of a bounded rationality, using rules of thumb and various heuristics (sometimes helpful, sometimes not) rather than the fully fledged maximizing rationality that is still largely accepted as the ideal for rational choice.

This paper argues that, for many decision-making problems, the normative account of rationality that animates rational choice theory, and not just the positive account that is criticized by the behaviorists, is deficient, even as a theory of ideally rational behavior, and that an alternative account of rational choice is required. Rationality, it is suggested, provides for an ordered particularity, including particular decisions, but the notion of an ordering that informs this alternative account of ideally rational behavior, and which is more appropriate in some decision-making contexts, including many legal ones, is very different from the idea of an ordering that informs the standard account within rational choice theory. The latter, which is closely allied to the idea of maximization, remains largely quantitative and single-minded in its orientation, this despite the pluralism of motivations that it appears to be willing and able to accommodate within its seemingly minimalist structure. The alternative account is more qualitative, or categorical (although not absolute), offering a conception of a rational ordering of particularity that is more allied to the idea of an understanding or interpretation (under rules or principles) than it is to maximization. In this paper this alternative conception of rationality is referred to as categorical reason.

The real challenge for the paper, however, is not so much to articulate two alternative accounts of rationality, but to begin to make each accessible to the other within some common intellectual framework. While rational choice theory provides a useful and precise set of tools for beginning this process of achieving mutual understanding, the paper argues that some quite fundamental postulates of rational choice theory (including the most basic choice consistency axiom and the strong independence assumption) will have to be relaxed if the contributions of categorical reason are properly to be accommodated within it. However, the paper shows that there is much advantage in this, even for what the rational choice theorist hopes to achieve, and illustrates the point by reference to some systematic difficulties that the rational choice theorist faces in the theory of social choice and game theory.

Abstract:
Economic theory has a problem with the idea of rational commitment. It might be rational for an agent to make such a commitment (e.g., a threat, a promise) because the commitment makes alternatives available that are preferred by the agent to those alternatives that are available if no such commitment is made. Unfortunately, however, the same preference maximizing rationality that is sufficient to motivate the idea of making the commitment initially is often also sufficient to undermine the commitment when it comes time to carry it out. For example, it might be wasteful or contrary to one's preferences, and nothing more, to carry out a threat (promise) if the threat (promise) has been unsuccessful (successful) in deterring (inducing) another's behavior in the way that was planned. To the extent that this ex post quandary is predictable ex ante, the threat (promise) is not a credible one to make, either for the party threatened (promised) or for the threatening (promising) party. The result is that the benefits of being able to make such threats (promises) are lost.

In this paper I argue that what economic theory needs to resolve the problem of rational commitment is an account of rationality that is so structured that it can simultaneously comprehend both the preference maximizing rationality of adopting a commitment and the more formal (less substantive, less preference-based) rationality of carrying out the commitment once it has been made. The difficulty, of course, is that a rationality that is too formal, or rigid, in its adherence to the planned commitment ceases to look rational at all. Indeed, it appears to look more like blind commitment or mere mechanical habit, the sort of thing that takes the agent beyond the state of reflection or deliberation that is characteristic of rational behavior.

However, I argue in my paper that the required rational structure is to be found in some recent work by John Broome and, more particularly, in the sharp conceptual difference that Broome makes between action in accordance with reasons and action according to the normative requirements of practical rationality. Broome shows that it is a common mistake to think that all of rational behavior is action according to (undefeated) reasons and that this ignores the more formal constraints that fall under the normative requirements of practical rationality. I argue that the economic theory of rational choice falls prey to this same confusion (where reasons, whatever their basis, are ultimately thought to give rise to a preference for doing x rather than y, and rational choice consists in following that preference), something that serves to undermine the possibility of keeping to commitments rationally made. However, if there is more to rationality than acting for reasons, as Broome suggests with his account of normative requirements, then it is possible to be rational even as one acts contrary to reason in some particular case. In my paper I show the importance of this argument for the economic problem of rational commitment in general, and for the problem of credible threats and promises more particularly.

Lest this argument be thought of theoretical interest only, I also show that the more robust model of rational commitment that is made possible by the idea of normative requirements of practical rationality should be familiar to legal theorists. For it is an idea manifested constantly in common law decision-making, where defeasible legal rules, apparently simultaneously, both determine cases (as a matter of normative requirement) and are determined by them (as a matter of reason). Thus, the logical distinction between reasons and the normative requirements of practical rationality can be used both to prescribe a solution for a problem in rational choice, namely, the problem of rational commitment, and to provide understanding for what is rational in legal reason and the method of common law adjudication.

practical rationality, reasons, rational choice, commitment, backward induction, centipede game, defeasibility, rules, legal reasoning, normative requirements

Abstract:
In this paper I hope to explain why game theory has been so unsuccessful in accounting for the role of language in social interaction. I will begin by exploring some of its most basic difficulties in this respect, in games of pure coordination, and trace these difficulties back to the most fundamental organizing concepts in the theory of games, namely, Nash equilibrium and common knowledge of rationality. Nash thinkers and Nash actors, I shall argue, are doomed to have very impoverished conversations as Nash talkers. The sorts of conversations they will have will leave them paralyzed in games of pure coordination and largely uncooperative in games where their interactions are at least partially characterized by conflicts of interest. These conversations are impoverished, we will see, because they attempt to forge only a causal connection across the verbal exchanges between rational actors, not a conceptual one. What is needed, I shall argue, is the richer sort of conversation that is idealized by law, that is, one where there is an interpenetration of concepts in the use of language between rational actors, the sort of thing we see under a truly shared or public reason.

I have organized the paper as follows. Part I introduces a simple game of coordination and shows how two fundamental concepts of game theory, namely, common knowledge of rationality and the idea of Nash equilibrium, combine to limit the players in these games to some very unsatisfactory results. It is shown that neither cheap talk nor costly signaling provides an obvious way around these problems; Nash talkers seem destined to replicate the difficulties of Nash thinkers in their only slightly more public interactions. Part II introduces the law's special sense of an objectively reasonable interaction. Law's reasonable thinkers, I argue, are more capable of coordinating, and law's reasonable talkers more capable of cooperating, than their Nash counterparts because, under reasonableness, they are committed to a more public conception of their conduct shaping what they do together. I finish with some brief concluding comments.

game theory, coordination, cooperation, communication, common knowledge of rationality, cheap talk, signaling, reasonableness, public reason, rational commitment, rational interaction

Abstract:
In their book The Economic Structure of Corporate Law, Frank H. Easterbrook, a judge for the Seventh Circuit of the U.S. Court of Appeals and a former law professor at the University of Chicago, and Daniel R. Fischel, the Lee and Brena Freeman Professor of Law at the University of Chicago, have very effectively brought economic analysis to bear on corporate law problems. The result is another impressive demonstration of the combination of theoretical argument and close attention to supporting data (usually in the form of stock market event studies) which has become characteristic of the economic and financial literature on the corporation over the last two decades.

Abstract:
In Caparo Industries Ptc. v. Dickman, the House of Lords turned its attention again to the age-old problem of determining the liability that is appropriate for a defendant that has caused pure economic loss to a plaintiff by way of a negligent misrepresentation. While the Court of Appeal agreed that the defendant auditing company was liable because it had breached a duty of care that it owed to the plaintiff as a shareholder, the House of Lords reversed this decision, arguing that information and advice in general, and auditing services in particular, are provided with a specific purpose in mind, and that liability for negligence must be restricted to losses following upon uses of the information for that particular purpose. The House of Lords was of the view that the Companies Act indicated that the financial statements in this case had been prepared for the use of the target company's shareholders at their annual meeting and not for the purpose of an investor launching a takeover, no matter how foreseeable that takeover might be. Thus, since the plaintiff had not used the negligently audited financial statements for their intended purpose, there was no liability.

What cases like Palsgraf and Caparo show is that it is not enough for a finding of liability that the plaintiff was injured, even if foreseeably so, by the defendant's wrongful conduct. Instead what matters is that the plaintiff be wrongfully injured by the defendant, that is, that the plaintiff's injury fall within the ambit of the defendant's wrongdoing rather than just be a cause-in-fact result of it. This is a subtle distinction to be sure. But it is an important distinction which preserves the intellectual integrity of tort law as something that can properly be the subject of adjudication - that is, legal argument and reasoned judgment - in a way that a pure public policy, or economic, analysis of tort law cannot.

Abstract:
This Article contends that the diversity of reasons chosen to rationalize different cases, even different cases within a given body of law, while evidencing contradiction to the legal skeptic, and arbitrary path dependence to the rational choice theorist, actually manifests law's overall reasonableness and coherence. The Article is organized as follows: Section I outlines the conventions of rational social choice that are relevant to this Article in both their preference-theoretic and their choice-theoretic forms. This Section also suggests a structural interpretation of these rationality requirements in terms of the general theory of the Good and in contrast to a general theory of the Right. Section II uses a simple abstract example to describe the very different notion of rationality that is inherent to legal reasoning across a set of "like cases", a form of reasoning that emphasizes the different relations between, rather than the comparable properties of, the various alternatives that are available for choice. This feature of legal reasoning explains the apparent partition- and path-dependence of judicial law making: the legal rule that is finally announced as rationalizing a set of cases depends on the sequence of choice over those cases. Legal reasoning is thus closer to theories of the Right, with their emphasis on process, than theories of Good, with their emphasis on the goals to be achieved in different end states. Section III illustrates the reasonableness of adjudication across a coherent set of like cases with an example taken from tort law. Finally, Section IV addresses the nagging question as to what possible advantage there could be, even for what the rational choice theorist hopes to accomplish, in law's reasonableness, that is, in the coherent yet path-dependent adjudication of a set of like cases. The Section argues, using an example based on Kaldor-Hicks efficient contracting and the cycle of social choice that it produces, that it is sometimes self-defeating to pursue a social goal directly and in a purely forward-looking way. The goal is often more likely to be achieved under the more coordinated set of choices made possible by a backward-looking (path-dependent) respect for prior choices.

Abstract:
In his interesting survey of "Recent Developments in the Canadian Law of Punitive Damages", Professor Feldthusen has identified three areas of particular interest. First, he compares the Canadian experience with punitive damages with the experience in the United States. Second, he argues that the purpose or rationale for punitive damages is punishment, not deterrence. And, third, he considers recent developments concerning punitive damages in a contractual context. This paper will eventually come to concentrate its attention on this third area of interest, punitive damages in contract, but it will do so in a way that implicates Professor Feldthusen's other two concerns in the process. In particular, by developing an essentially compensatory theory of "punitive" damages as aggravated damages rather than one based on either punishment or deterrence, it will show that some of the traditional views that restricted the availability of punitive damages in contract, as well as more recent developments in Canada and the United States that have expanded their availability in certain contexts, can be better explained and understood. The paper finishes with some speculative remarks on what, given a compensatory theory of "punitive" damages as aggravated damages, the quantum of damages should properly be.

Abstract:
In recent years there has been much discussion of two theorems in economics that relate individual rights to Pareto optimality. In the area of law and economics, Ronald Coase is well known for demonstrating that in a world without transaction costs bargaining will always result in a Pareto-efficient outcome, whatever the initial distribution of rights. In social choice theory, however, Amartya Sen has shown that for certain configurations of individual preferences, the reasonable exercise of individual rights can lead to outcomes that are Pareto-inferior to other outcomes that are attainable. Clearly, there is some tension between these two results. The purpose of this paper is to point to the lessons we might learn from Sen's theorem in particular and from social choice theory in general, and to suggest some implications for the treatment of individual rights within the currently fashionable economic analysis of law. Specifically, I shall argue that rights cannot be sensibly incorporated within any kind of maximization framework, and that this conclusion renders suspect Richard Posner's normative defense of wealth maximization as a goal for legal systems.

Abstract:
After a comparative review of the law on punitive damages in the United Kingdom, Canada and the United States, a review that shows a significant divergence of thinking across these different legal systems, we look more closely at the compensatory, retributive, and deterrence rationales for punitive damages. We show that these different rationales imply different ways of looking at the general puzzle of conjoining a punitive focus on the defendant with a compensatory role for the plaintiff, and so have quite different implications for such first-order issues as the type of conduct addressed and the quantum of damages to be prescribed. We also demonstrate that the different rationales imply very different legal responses at a second-order level of institutional detail, including whether punitive damages should be insurable, whether vicarious liability is appropriate, or whether certain criminal law type procedural protections (e.g., a higher burden of proof) are required. At the conclusion of our analysis we provide a summary matrix of the different implications of all the rationales for both the first and second-order issues. This matrix accounts for why it is generally believed that the law on punitive damages is not now developing in a sufficiently single-minded or coherent fashion. No single legal institution can be responsive to the requirements of all three rationales, and a choice must be made among them. We hope that our analysis helps to inform that choice.

Abstract:
It is tempting to think that the problem with corporate responsibility, and liability, is that there is not enough of it. However, rather than worry about a systematic deficiency of due care by corporations, the argument in Part II of this Article suggests that the real difficulty in the corporate liability context (a difficulty that we might not observe directly, but one that drives the phenomena that we do observe) is that tort law induces excessive levels of corporate care, particularly if the liability regime targets the individual employee for personal responsibility. This, I suggest, is problematic on either an efficiency analysis or a corrective justice theory of tort law. In Part III, the Article examines the present regime which allows for dual liability - that is, the liability of both the corporation and the employee - and finds that this is only a partial response to the problem. Thus, the proposed corporate liability solution in the Article becomes enterprise liability combined with an immunity in tort for corporate employees. Finally, after explaining why vicarious enterprise liability is properly restricted to the acts of an employee which are committed within the scope of employment ( a standard restriction that other theories of vicarious liability do not adequately explain), Part IV argues for one exception to the general rule of employee immunity for corporate torts: the case of gross personal negligence, or the sort of thing that often takes employees too far from the course of their employment in pursuit of some private profit that greatly exceeds the cost to the employee of losing his or her job.

Abstract:
The author critiques Ronald Daniels' article, Must Boards Go Overboard? An Economic Analysis of the Effects of Burgeoning Statutory Liability on the Role of Directors in Corporate Governance. Having shown that increased directors' liability is not the obvious solution to an apparent problem, Daniels leaves us with no answer to the call for more corporate social responsibility. One way that does not depend so much on a regime of ex post enterprise liability is to introduce a socially responsive ex ante governance regime into the corporate boardroom, one which allows different corporate stakeholders a right to participate in corporate decision-making up front. This is what Stanley Beck and others have recommended in their work, and in this comment the author provides an assessment of the feasibility of this broader form of corporate governance. Stakeholder participation in corporate decision-making could take place at either the board or committee lever. However, the author concludes that, because of certain problems of collective choice, the committee system is not so much an attractive alternative to the overall design of more representative corporate boards, as Beck sometimes suggests in his work, as it is an essential complement to any such structural change.

Abstract:
This Article offers a "legal analysis of economics" in contradistinction to the prevailing "economic analysis of law." The economic problem that forms the subject matter of the theoretical legal analysis is the problem of rational commitment. The difficulty here is that an agent can have a reason, or a preference, to commit to do something that he will have no reason actually to do, or which will be contrary to preference when the time comes actually to do it. Familiar examples include the problem of making credible threats or promises.

This Article develops an account of the rational actor that differs from that conventionally supplied by rational choice theory to handle this problem. Borrowing from some work by the philosopher-economist John Broome, the Article argues that rational decision-making involves more than acting on the balance of reasons, or all-things-considered preferences; it also consists in following the normative requirements of practical rationality. After articulating the logical distinction between reasons and normative requirements, the Article argues that this richer account of the rational actor is manifested in common law adjudication and, more particularly, in the special relationship that exists between decided cases and defeasible legal rules. The Article suggests that this is exactly the sort of rationality that the economist needs to comprehend, and solve, the problem of rational commitment.

Abstract:
In a series of recent papers a number of economists and philosophers have been wrestling with the age-old problem of reconciling the value we place on the exercise of individual liberty with the value we also seem to accord to economic efficiency. Amartya Sen put the problem in its starkest form when he showed that for some configurations of individual preferences the two following principles are not consistent with one another:

(i) The Pareto Principle: If every individual in society prefers some state of affairs x to another one y, then y should not prevail if x is attainable; and

(ii) The Principle of Individual Liberty: For each individual in society there are some "personal" matters such that if the privileged individual prefers, say, w to z, then z should not prevail if w is attainable (eg. to sleep on one's back (w) or one's stomach ( z ) , all other things in society being equal).

The purpose of this paper is to view Sen's problem on "the impossibility of the Paretian liberal" from the larger perspective of a general divide which exists in ethics between consequentialist and deontological theories and so demonstrate the source of this inconsistency. In the process I hope to show why economists, and in particular those economists who are the practitioners of the theory of social choice, are committed to a theoretical structure which renders individual rights inconsequential.

Section 2 of this paper summarizes Sen's original theorem. Section 3 discusses the above-mentioned divide in ethics between consequentialism and deontology. Section 4 gives an example, interpreted in Sen's terms, of a situation in which this distinction in ethics may be important. The section also shows that the distinction has important implications for Sen's invocation of the usual collective rationality conditions of social choice theory. Section 5 anticipates a possible objection to my arguments and attempts an explanation of the nature of a moral dilemma. I finish with some concluding remarks in Section 6.

Abstract:
In this Article we emphasize the important role that is played by choice sequences or processes in the determination of policy outcomes. As a positive matter, we show that if choice sequences are not reflected upon seriously, then the final policy outcomes that result from using those processes can be quite arbitrary. Indeed, the diversity of policy choice which we observe in automobile accident law across different state jurisdictions probably reflects this arbitrariness. In place of this arbitrariness, and building as a normative matter on certain results in the theory of public and social choice (particularly those results that recognize the importance for political stability of imposing certain forms of "value restriction" on the values that are inputted into political processes), we propose a non-arbitrary choice sequence for choosing among the various policy options that are typically available in automobile accident compensation law. We argue that the sequence-dependent results of a non-arbitrary choice process are acceptable in a way that the sequence-dependent results of processes that have never been the subject of any theoretical or normative reflection are not.

Abstract:
This Article argues that there are methods for dealing with plural values that are structurally very different from those conventionally assumed within rational choice theory under the ideas of commensurability or lexical priority. In particular it is argued that plural values can be integrated rationally into an overall all-things-considered decision as a matter of "conceptually sequenced argument". Such an argument allows for the rational possibility that one of the non-commensurable (plural) values might have a priority at one stage in the choice sequence while also allowing for that priority to be relaxed or defeated at a subsequent stage. Such a procedure, while it might appear to involve self-contradiction if we look only at the choices as revealing values embedded in the alternatives for choice, will look perfectly coherent if we understand the choice procedure as a conceptually-ordered (or partition-dependent) sequence. The Article argues that legal decision-making and the process of adjudication, in their insistence on a role for reason-based choice and the interpersonal significance of argument and reply, regularly manifest such a conceptually sequenced ordering of plural values. The different theories of Richard Epstein, George Fletcher and Ernest Weinrib are compared in this respect.

Abstract:
In this paper I try to argue that the special sort of structure that links legal rules to their exceptions, namely, the structure of defeasibility, provides an account of rule-based decision making which is not exactly equivalent to rule-bound decision making, that is, to invariably following the rules. While defeasibility provides conceptual space for the categorical guidance of rules, it also allows for their non-absolute character, or their revision in the face of countervailing factors.

I have also argued that something like a defeasible conception of rationality is what is required for the theory of games. What is needed there is a conception of rationality that, like rules, is sufficiently strong to provide some prima facie guidance for conduct at various points of choice, while at the same time not so strong as to preclude (empirically or logically) the possibility of being at those points of choice at all.

Both legal rules and the rules of rationality are neither wholly descriptive nor wholly prescriptive in nature. In this they are quite different from both scientific laws, which are taken to provide descriptions of what `is`, and moral laws, which are thought to provide prescriptions for what `ought` to be. Both legal rules and the rules of rationality seem to bridge this is-ought divide. It should not be surprising, therefore, that legal rules and the rules of rationality might have a common structure, and that this structure, a structure that needs to accommodate both regularity and (an independent) particularity, might be provided by the concept of defeasibility.

Abstract:
Game theory probably offers the most well-known account of how rational agents interact in strategic situations. The rational thought processes that are involved, while enormously sophisticated, remain very private for each agent. Less well known is the alternative account that is offered by law and legal theory, an account where agents interact, and understand their interaction, under the idea of public (or objective) reasonableness. This Article argues, using some simple examples, that the legal account does better than the game theoretic account in explaining the actual levels of cooperation and coordination we observe across rational individuals in strategic situations.

Abstract:
The call for regulatory reform is supported by essentially three kinds of arguments. First, there is the general claim that most regulation has been dominated by redistributive concerns, and that existing policies should be reoriented towards the pursuit of economic efficiency. Second, libertarians argue that some forms of regulation unjustly restrain the exercise of individual freedoms. Third, there is the political concern that regulatory processes suffer from systemic imbalances in the representation of affected interests and that institutional reforms are necessary to correct these biases.

In this article, it is argued, first, that the efficiency argument for regulatory change is logically inconsistent because it incorporates a measure of value that does not promote its stated goal. Second, it is argued that the libertarian argument for regulatory reform is seriously inadequate because it fails to articulate a conception of the good that is necessary for identifying the particular forms of liberty that it seeks to protect. Third, it is argued that the "imbalanced representation" argument, while advancing an attractive conception of political equality, provides only partial and uncertain support for the particular institutional reforms that have been proposed. It is argued that the uncertain basis for these reforms is attributable to an exclusively result- or output-oriented conception of political equality.

The main purpose of this article is to criticize the coherence and completeness of the three principal arguments currently advanced on behalf of regulatory reform. A difficulty is that it may be misconstrued as an affirmative defence of the regulatory status quo. But the status quo stands as much in need of ethical justification as any proposed reform. While the article does not attempt to provide an alternative normative framework for justifying either regulatory change or maintenance of the status quo, it should clarify some of the ethical issues for those who are willing to undertake these more constructive tasks.

Abstract:
Ernest Weinrib characterizes private law in general, and tort law more specifically, as an "exhibition of intelligence." To grasp private law is to come to terms with it, not merely as a set of decisions authoritatively imposed upon litigants, but as an engagement of thought where, says Weinrib, "the process of justification is at least as important as the result of individual adjudications." In this essay, after offering a choice theoretic interpretation of any form of accident law as necessarily involving problems of multi-criterial decision-making, I also try to take seriously the idea that the private law of tort is an engagement of thought or an exhibition of intelligence. But I do so in a way that allows, more than Weinrib does, for the self-sufficiency, or independent significance, of genuinely plural criteria. The concern for law as an engagement of thought is evidenced, first, by the fact that I secure the foundations for my particular path-dependent method for accommodating pluralism within the logically rigorous analyses provided by the theory of social choice and, second, by the fact that I interpret this path-dependence as a conceptually sequenced argument developed between two litigants. The respect I attach to the independent significance of plural criteria, and in particular to the significance of both rights and welfare as criteria properly relevant to tort law, is shown by the way I give rights and corrective justice their priority in this argument, even as I allow the more welfarist concerns for efficient deterrence and reasonable compensation to defease this priority at some subsequent stage of the argument. The danger of such defeasibility being arbitrary or ad hoc is avoided precisely because it is conceptually ordered. Moreover, because the plural values are accommodated in sequence rather than under a simultaneous mutual conditioning of parts (as Weinrib seems to require), the sort of contradiction that we might otherwise observe within flat legal thinking is avoided. Thus, a conceptual ordering, which allows for the defeasible priority of genuinely plural criteria, seems to provide both for a formal structure of coherent pluralism, in a way that Weinrib denied was possible, and for a normatively attractive content for that structure in the combined consideration of rights and welfare. Indeed, this combination is sufficiently attractive, I argue, to compel our continued allegiance to tort law as one of the more reasonable methods for dealing with the costs of wrongful interactions between persons.

Abstract:
This Article provides a social choice theoretic interpretation (and appreciation) of the third, or charitable sector, of our economy. In Part I a general theory of institutional failure, based on Kenneth Arrow's "impossibility theorem", is presented. In Part II, the special significance of Arrow's theorem for both the pure market and pure government sectors is demonstrated. Each of these two sectors is shown to manifest the Arrow problem, albeit in seemingly quite different ways. In the market context, Arrow's problem shows up as the market's inability to provide pure public goods (a kind of inactivity that is symptomatic of attempting to satisfy the choice invariance that is required by Arrow's condition of independence of irrelevant alternatives); in the political context the exactly analogous problem of public goods manifests itself as political instability (a kind of activity excess, or cycling, that is symptomatic of social choice being invariantly responsive to different winning coalitions). Part III suggests how the charitable sector, by adopting a tax subsidized scheme of voluntary price discrimination for the provision of public goods, avoids Arrow's problem. Such price discrimination reduces the range of disagreement in preferences across individuals that otherwise (under non-discriminatory prices) would fuel political instability in the government sector. In the private sector, the tax subsidy encourages voluntary giving at these discriminatory prices only because it works most closely and effectively with a limited domain of individual preferences, namely, those preferences which are reciprocal to, or seek the assurance of, the voluntary giving of others. Such preferences are obviously very different from those conventionally assumed in the economist's "free rider" analysis of the public goods problem. Thus, the charitable sector's solution to the Arrow problem is based upon restricting the domain of individual preferences that are effectively admissible into social decision-making. Part IV describes how the charitable sector's solution to Arrow's problem is further secured through rules which require, first, that the entities granted charitable status be those that promote a genuine public good and, second, that these entities do not engage in political activity.

Abstract:
In two recent papers Christian List and Philip Pettit have argued that there is a problem in the aggregation of reasoned judgements that is akin to the aggregation of preference problem in social choice theory. List and Pettit prove a new general impossibility theorem for the aggregation of judgements, showing that no judgement aggregation function for a group is possible if the group seeks to satisfy certain "minimal conditions". These conditions are designed to ensure that the function is both responsive to the individually rational views of its members and collectively rational in the set of judgements it holds.

In this paper I resist the List and Pettit claim that there is the same propensity for collective irrationality in the aggregation of reasoned judgements as there is in the aggregation of preference. I argue that group decisions based on reasons are mediated by a logical structure that is lacking in group decisions based on mere preference. This additional logical structure means that the level of agreement of individual judgements on some propositions must be given a priority over comparable levels of agreement over others, a priority that is not permitted by one of the conditions imposed by List and Pettit. The need for this priority is particularly apparent, I argue, if one views the aggregation of judgement through the lens of common law decision-making.

Social choice, judgement, Condorcet jury theorem, collective rationality, public reason

Abstract:
In the 1993-94 Term the Supreme Court of Canada decided nine torts cases. Some of the issues treated in these decisions raise fundamental questions for the proper understanding of tort law. Three of these, Cunningham v. Wheeler, Cooper v. Miller, and Shanks v. McNee, all concerned the vexing question of when to deduct collateral benefits from damages, and were dealt with under one set of judgments. Two others, Brown v. British Columbia (Minister ofTransportation and Highways) and Swinamer v.Nova Scotia (Attorney General), both of which concerned negligence actions against public authorities, while treated separately in different judgments, involved much overlap in the judicial opinions offered. This review of the 1993-94 Term will deal with these five cases in some detail in Parts II and III.

This leaves four cases, each of which received independent treatment from the Court. Two of these Gibney v. Gilliland and Granville Savings and Mortgage Co. v. Slevin are hardly worth a mention. However, the remaining two tort cases the Court chose to during hear this Term are more interesting. The first of these, Galaske v. O'Donnell, which dealt with a driver's duties to ensure that child passengers wear seat-belts, is discussed briefly in Part IV. The other case, Toneguzzo-Norvell v. Burnaby Hospital, which dealt with measures of damages, including measures of lost earnings that might reflect systemic future discrimination against female infant plaintiffs, is discussed at more length in Part V.

Abstract:
This paper offers an account of the important role which an obligation to provide reasons can play in avoiding some of the systematic difficulties encountered in the theory of rational social choice. The paper builds on some of the insights offered by theories of structure-induced equilibrium. It argues that the obligation to provide reasons for certain choices, reasons which must be articulated and structured around a set of generally shared and publicly comprehensible categories of thought, can serve to make the space of possible choices "concept-sensitive" in a very useful way. Concept-sensitivity has the effect of restricting certain movements within the choice space so that some of the difficulties for achieving an equilibrium in social choice, difficulties which arise out of an excess of rational doing, are avoided. The resulting equilibrium is path dependent, of course, but because it is dependent on a choice path which "makes sense" (or is ordered by thought precisely because it is concept-sensitive), it is not the sort of arbitrary path dependent social choice which was of such concern to Kenneth Arrow in his original Nobel prize winning work.The paper illustrates its points with examples taken from the law. The law is a method of making social choices which emphasizes (in a very self-conscious way, and one which has no parallel either in politics or the market) the justificatory significance of the obligation to give publicly accountable reasons which attend to those issues arising in an ordered way out of a highly structured adjudicative process. Thus, the paper has as one of its ambitions the bringing together of two accounts of rational decision-making which, to this point at least, have not had much contact, namely, the theory of rational social choice and the theory of legal reasoning.